Does a fall in the dollar mean higher U.S. consumer prices?

Diego Valderrama

FRBSF Economic Letter, 2004, issue may9

Abstract: This Economic Letter looks at the relationship among changes in the exchange rate value of the dollar and in import prices and overall consumer prices, with a particular focus on the current circumstances. It appears that the lower value of the dollar at this point is affecting U.S. prices less than it has historically. The reasons for the difference include changes in trading partners, changes in the composition of U.S. trade, and improved monetary policy over the last several years. Looking ahead, then, it appears likely that the recent dollar depreciation will have only very moderate effects on overall consumer prices.

Keywords: Foreign exchange rates; Inflation (Finance); Dollar, American; Consumer price indexes (search for similar items in EconPapers)
Date: 2004
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