Exchange rate policy and trade deficit in the United States of America

Katarzyna Twarowska

Abstract


Exchange rate policy of a large country such as the United States is particularly important, for the domestic economy as well as other countries and the entire world economy. The exchange rate could affect several aspects of economic performance. Possible effects of depreciating currency include increased net exports, decreased international purchasing power, rising commodity prices, and upward pressure on interest rates. The aim of the paper is to analyze and evaluate the exchange rate policy of the United States and its links to the trade balance. The presentations of theories explaining the relationship between exchange rate and trade balance is followed by the analysis of the statistical variables in the specified periods. The conclusion is that nowadays, under a floating dollar and growing capital flows, the trade balance is increasingly determined by issues related to U.S. fiscal and monetary policies and the propensity to save, as well as the policies of the major trading partners of the United States and the possibilities for cooperation on the international level.


Keywords


exchange rate policy, dollar, trade deficit

Full Text:

PDF (Język Polski)

References


Agnew J., Corbridge S. (1991), Międzynarodowe implikacje deficytu handlowego i budżetowego Stanów Zjednoczonych, „Sprawy Międzynarodowe”, nr 5, s. 62.

Angeloni I., Bénassy-Quéré A., Carton B., Darvas Z., Destais Ch., Pisani-Ferry J., Sapir A., Vallee S. (2011), Global currencies for tomorrow: a European perspective, Bruegel Blueprint Series, Vol. 13.

Bernanke B. (2005), The Global Savings Glut and the US Current Account Deficit, remarks at the Homer Jones Lecture, St. Louis, Missouri.

Białowąs T., Kąkol M. (2010), Wymiana handlowa Stanów Zjednoczonych z Chinami w latach 1978‒2008, [w:] J. Marszałek-Kawa, Militarne i gospodarcze determinanty państwowości azjatyckiej, Wyd. Adam Marszałek, Toruń.

Bilski J. (2006), Międzynarodowy system walutowy, PWE, Warszawa.

Bluedorn J.C., Leigh D. (2011), Revisiting the Twin Deficits Hypothesis: The Effect of Fiscal Consolidation on the Current Account, „IMF Economic Review”, Vol. 59, Issue 4. DOI: http://dx.doi.org/10.1057/imfer.2011.21

Borio C., Disyatat P. (2011), Global imbalances and the financial crisis: Link or no link?, „BIS Working Papers”, No. 346, May 2011, s. 3‒27.

Boughton J.M. (2001), Silent Revolution. The International Monetary fund 1979‒1989, IMF, Washington.

Bracke T., Bussiere M., Fidora M. (2008), Straub R., A framework for assessing global imbalances, „Occasional Paper Series”, No. 78, January 2008, ECB, s. 12.

Bradsher K. (1995), Treasury Chief Says Strong Dollar Isn’t a Threat to Trade, „New York Times”, 17 August 1995; http://www.nytimes.com/1995/08/17/business/international-business-treasury-chief-says-strong-dollar-isn-t-a-threat-to-trade.html.

Brenner R. (2002), The Boom and the Bubble. The US in the World Economy, Verso, London–New York.

Chinn M.D. (2013), Global Imbalances, [w:] G. Caprio (ed.), The Evidence and Impact of Financial Globalization, Vol. 3, Elsevier Inc., Oxford.

Chrabonszczewska E., Kalicki K. (1998), Teoria i polityka kursu walutowego, SGH.

Cooper R.N. (1988), Toward an International Commodity Standard?, „Cato Journal”, Vol. 8, No. 2.

Drabowski E. (1985), Teorie kursu walutowego, PWE.

Dunaway S. (2009), Global Imbalances and the Financial Crisis, Council Special Report, No. 44, Council on Foreign Relations. Center for Geoeconomic Studies, March 2009, s. 13.

Eichengreen B. (1996), Globalizing capital: A History of the International Monetary System, Princeton University Press.

Elwell C.K. (2011), The Depreciating Dollar: Economic Effects and Policy Response, „CRS Report for Congress”, Congressional Research Service, 15 April 2011.

Engel Ch., Rogers J.H. (1999), Violating the Law of One Price: Should We Make A federal Case Out of It?, „NBER Working Paper”, No. 7242.

Eurostat (2014), Statistics Database, http://epp.eurostat.ec.europa.eu (dostęp: 29.10.2014 r.).

Feldstein M. (1989), The Case Against Trying to Stabilize the Dollar, „American Economic Review”, Vol. 79, No. 2.

Ferguson N., Schularic M. (2007), Chimerica and global asset market boom, „International Finance” 10:3, s. 230‒231.

Frenkel J.A., Goldstein M. (1988), The International monetary System: Developments and Prospects, „Cato Journal”, Vol. 8, No. 2.

Garritsen de Vries M. (1986), The IMF in the Changing World 1945‒1985, IMF, Washington.

Garritsen de Vries M. (1985), The International Monetary Fund 1972–1978, Cooperation on Trial, Vol. 2: Narrative and Analysis, IMF, Washington.

Ghosh A. (2008), Turning Currencies Around, „Finance&Development”, Vol. 45, No. 2.

Goldstein M. (1988), Rethinking International Economic Coordination, „Oxford Economic Paper”, Vol. 40, No. 2.

Haberler G. (1988), Should Floating Continue?, „Cato Journal”, Vol. 8, No. 2.

Hoontrakul P. (1999), Exchange Rate Theory. A Review, „Discussion Paper”, Chulalongkorn University.

International Monetary Fund (2014), World Economic Outlook Database, October 2014, http://www.imf.org.

International Monetary Fund (2007), World Economic Outlook. Spillovers and Cycles in the Global Economy. April 2007, Chapter 3, Exchange Rates and the Adjustment of External Imbalances, Washington.

James H. (1996), International Monetary Cooperation Since Bretton Woods, IMF, Oxford University Press, Washington–New York.

Kanamori T., Zhao Z. (2006), The Renminbi Exchange Rate Revaluation: Theory, Practice and Lessons from Japan, „Asian Development Bank Institute Policy Paper”, No. 3.

Kąkol M., Mucha-Leszko B. (2003), The economic situation of the euro area on the background of present tendencies in the economies of the United States and Japan, [w:] A. Santagostino (ed.), Europe: Reunification, Enlargement, Single Currency, Edizioni CLUB, Brescia.

Lawrence H. (2012), Exchange Rates Between the United States Dollar and Forty-one Currencies, MeasuringWorth, http://www.measuringworth.com/exchangeglobal/.

Misztal P. (2009), Podstawowe teorie kształtowania się kursu walutowego, [w:] A. Kosztowniak, P. Misztal, I. Pszczółka, A. Szelągowska, Finanse i rozliczenia międzynarodowe, Wyd. C.H. Beck, Warszawa.

Montiel P.J. (2012), Makroekonomia międzynarodowa, Warszawa.

Mucha-Leszko B. (2005), Współczesna gospodarka światowa. Główne centra gospodarcze, Wyd. UMCS, Lublin.

Mucha-Leszko B. (2005), Rozwój powiązań w gospodarce światowej ‒ etapy globalizacji i regionalizacja procesów gospodarczych, [w:] B. Mucha-Leszko (red.), Współczesna gospodarka światowa. Główne centra gospodarcze, Wyd. UMCS, Lublin.

Mucha-Leszko B., Kąkol M. (2009), Polityka Systemu Rezerwy Federalnej USA i jej skutki w latach 1995‒2008, [w:] J. Bednarczyk, S.I. Bukowski, J. Misala (red.), Współczesny kryzys gospodarczy. Przyczyny – przebieg ‒ skutki, Wyd. CeDeWu, Warszawa.

Mucha-Leszko B., Kąkol M., Białowąs T. (2009), Analiza handlu towarami Unii Europejskiej w latach 1995‒2008 i ocena konkurencyjności, [w:] B. Mucha-Leszko (red.), Pozycja Unii Europejskiej w handlu międzynarodowym. Dynamika i struktura obrotów. Konkurencyjność. Główni partnerzy, Wyd. UMCS, Lublin.

Mucha-Leszko B., Kąkol M. (2009), Will the financial-economic crisis of 2008‒2009 accelerate monetary integration in the EU?, „Eurolimes”, Vol. 8.

Mundell R.A. (2001), On the History of the Mundell-Fleming Model, „IMF Staff Papers”, Vol. 47, Special Issue.

Murray Ch.J., Pappel D.H. (2005), The Purchasing Power Parity Puzzle is Worse Than You Think, „Journal Business and Economic Statistics”, No. 4, October 2005.

Mussa M., Goldstein M., Clark P.B., Mathieson D.J., Bayoumi T. (1994), Improving the International Monetary System, „IMF Occasional Paper”, No. 116.

New Treasury Secretary backs strong dollar, Social security solution (2006), „USA Today” 1 August 2006, http://www.usatoday.com/.../2006-08-01-paulson-speech_x.htm.

Nurkse R. (1945), Conditions of International Monetary Equilibrium, Princeton.

Obstfeld M., Rogoff K. (2009), Global Imbalances and the Financial Crisis: Products of Common Causes, „CEPR Discussion Papers”, No. 7606, http://www.cepr.org/pubs/dps/DP7606.

Papaioannou S., Yi K.M. (2001), The Effects of a Booming Economy on the U.S. Trade Deficit, „Current Issues in Economics and Finance”, Federal Reserve Bank of New York, February 2001.

Petruno T. (2009), Treasury Secretary Timothy Geithner pays lip service to keeping dollar strong, „Los Angeles Times”, 12 November 2009, http://articles.latimes.com/2009/nov/12/business/fi-geithner-dollar12.

Quelch J.A., Buzzell R.D., Salama E.R. (1991), The Marketing Challenge of Europe 1992, Addison‒Wesley Publishing Company.

Reinhart C., Reinhart V. (2002), Is a G-3 Target Zone on Target for Emerging Markets, „MPRA Paper”, No. 7 581.

Report to Congress on International Economic and Exchange Rate Policies (2014), U.S. Department of the Treasury Office of International Affairs, 15 April 2014.

Rogoff K. (1996), The Purchasing Power Parity Puzzle, „Journal of Economic Literature”, No. 24, s. 647‒665.

Sachs J. (1986), The Uneasy Case for Greater Exchange Rate Coordination, „American Economic Review”, Vol. 96, No. 2.

Schneider H., Irwin N. (2011), G‒7 to Help Avoid Sharp Yen Rise, „The Washington Post”, 18 March 2011.

Schwab K. (2014), The Global Competitiveness Report 2013–2014. Full Data Edition, World Economic Forum, s. 382, Geneva.

UNCTAD (2014), UNCTADstat Database, http://unctadstat.unctad.org.

Williamson J. (1986), Target Zones and the Management of the Dollar, „Brookings Papers on Economic Activity”. DOI: http://dx.doi.org/10.2307/2534416




DOI: http://dx.doi.org/10.17951/h.2015.49.2.215
Date of publication: 2015-07-28 13:12:35
Date of submission: 2015-07-28 10:49:32


Statistics


Total abstract view - 909
Downloads (from 2020-06-17) - PDF (Język Polski) - 0

Indicators



Refbacks

  • There are currently no refbacks.


Copyright (c) 2015 Katarzyna Twarowska

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.