Why is the Dollar So High?

Martin Feldstein

Scholarly Articles from Harvard University Department of Economics

Abstract: The level of the dollar is part of a complex general equilibrium system. Nevertheless, it is helpful to recognize that the high level of the dollar is necessary to generate the current account deficit equal to the difference between national saving and investment. Understanding the high level of the dollar therefore requires understanding the reasons for the low level of national saving in the United States. Reducing the large current account deficit will require both a higher rate of national saving and a more competitive dollar. Although the necessary decline in the real value of the dollar can in theory occur without a decline in the dollar's nominal value, the implied magnitude of the fall in the domestic price level is implausible. A decline of the real value of the dollar that is large enough to reduce the current account deficit significantly requires a significant decline in the nominal value of the dollar.

Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Published in Journal of Policy Modeling

Downloads: (external link)
http://dash.harvard.edu/bitstream/handle/1/2794833/felds_dolla.pdf (application/pdf)

Related works:
Journal Article: Why is the dollar so high? (2007)
Working Paper: Why is the Dollar So High? (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hrv:faseco:2794833

Access Statistics for this paper

More papers in Scholarly Articles from Harvard University Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Office for Scholarly Communication ().