Is a Declining Dollar Good for Either the U.S. Economy or The Global Ecnomy?

Paul Davidson ()

International Trade from EconWPA

Abstract: This paper explains why a declining dollar is likely to prove deleterious to both the US economy and the Global economy. It provides statistics to demonstrate that despite a 25 percent drop in the dollar in 3 years, the US trade deficit has doubled in value. It explains why this doubling has occurred in terms of the absence of the Marshall- Lerner condition. Finally, the paper provides a new alternative policy perscription that will alleviate the US trade dficit hile promoting more rapid global economic growth for the entire global economy.

Keywords: Marshall-Lerner condition; trade deficits; flexible vs. fixed exchange rates (search for similar items in EconPapers)
JEL-codes: F1 F2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cba and nep-ifn
Date: 2005-05-20
Note: Type of Document - wpd; pages: 24. Paper presented at the Levy Institute Conference, April 2005
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpit:0505012

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