How much depreciation of the US dollar for sustainability of the current accounts?

Eiji Ogawa and Takeshi Kudo

Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: In this paper, we conduct a simulation analysis to investigate how much depreciation of the US dollar is needed to reduce the current account deficits in the near future. We use some VAR models to estimate relationships between the exchange rate of the US dollar and the current accounts in the United States. We conclude that some scenarios of the US dollar depreciation would reduce the current account deficits to a level under 2% of GDP in the next several years. The results are regarded as robust for each of the scenarios thought they depend on our supposed VAR models.

Keywords: US dollar depreciation; Current account sustainability; Investment-saving balance; International trade flows; Vector Autoregression (VAR) (search for similar items in EconPapers)
JEL-codes: F31 F32 F47 (search for similar items in EconPapers)
Date: 2004-11
New Economics Papers: this item is included in nep-cmp and nep-ifn
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:hst:hstdps:d04-44

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