Is Strong Dollar Enhancing Economic Growth?

Deergha Raj Adhikari, S.P. Uma Rao and Denis Boudreau
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Deergha Raj Adhikari: Department of Economics and Finance, University of Louisiana at Lafayette, LA - USA
S.P. Uma Rao: University of Louisiana at Lafayette, LA - USA
Denis Boudreau: University of Louisiana at Lafayette, LA - USA

Economia Internazionale / International Economics, 2026, vol. 79, issue 2, 187-198

Abstract: In this study, we measure the real output effect of the appreciation in the value of US dollar measured by US dollar index (USDI). Our dependent variable is percentage change in US real GDP and the independent variable is percentage change in US dollar index. We applied the vector error correction model on those variables using US data from 1974 to 2019. We found that any increase in US dollar index would negatively affect US real GDP with a one-period lag. So, we concluded that a strong dollar would have a negative impact on US economy.

Keywords: US Dollar Index; US Real Output; Vector Error Correction (search for similar items in EconPapers)
JEL-codes: E01 E22 F31 F43 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ecoint:022477

DOI: 10.65644/EIIE.079.02.0187

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