US Current Account Deficit and Exchange Rate Tax

Gabrielle De Lima, Guilherme Moura (), Roberto Meurer and Sergio Da Silva

MPRA Paper from University Library of Munich, Germany

Abstract: We examine the relationship between the US current account deficit, the international value of the dollar, and the dollar reserves of foreign central banks. We find that the international value of the dollar impacts the US current account and also that dollar depreciations are accompanied by reductions in the inflow of foreign reserves. The inflow reductions are indicative that the US levies an exchange rate tax on foreigners because the foreign stock of reserves loses value.

Keywords: US current account; exchange rate tax (search for similar items in EconPapers)
JEL-codes: F32 F42 (search for similar items in EconPapers)
Date: 2007-07-08
New Economics Papers: this item is included in nep-ifn
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