Fundamentals at Odds? The US Current Account Deficit and Dollar

Gian Maria Milesi‐Ferretti
Authors registered in the RePEc Author Service: Gian Maria Milesi-Ferretti ()

Economic Notes, 2008, vol. 37, issue 3, 259-281

Abstract: In mid‐2008, the real effective exchange rate (REER) of the dollar was close to its minimum level for the past four decades. At the same time, however, the US trade and current account deficits remain large and, absent a significant correction in coming years, would contribute to a further accumulation of US external liabilities. The paper discusses the tension between these two aspects of the dollar assessment, and what factors can help to reconcile them. It focuses in particular on the terms of trade, adjustment lags and measurement issues related to both the REER and the current account balance.

Date: 2008
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Working Paper: Fundamentals at Odds? The US Current Account Deficit and The Dollar (2008)
Working Paper: Fundamentals at Odds? The U.S. Current Account Deficit and The Dollar (2008)
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