Dollar depreciation : economic effects and policy response / Lachlan S. Roy, editor.

Format:

Book

Contributor:

Roy, Lachlan S.

Series:

American political, economic, and security issues series.

Novinka (Series)

American political, economic, and security issues

Novinka

Language:

English

Subjects (All):

Dollar, American.

Foreign exchange rates--United States.

Foreign exchange rates.

Devaluation of currency--United States.

Devaluation of currency.

United States--Foreign economic relations.

United States.

Physical Description:

1 online resource (109 p.)

Edition:

1st ed.

Place of Publication:

New York : Nova Science Publishers, Inc., c2011.

Language Note:

English

Summary:

A trend depreciation of the dollar since 2002 raises concern among some in Congress and the public that the dollar's decline is a symptom of broader economic problems, such as a weak economic recovery, rising public debt, and a diminished standing in the global economy. However, a failing currency is not always a problem, but possibly an element of economic adjustments that are, on balance, beneficial to the economy. This book examines the economic context in which to view the dollar's recent and prospective movement, and analyzes the evolution of the exchange rate since its peak in 2002. It also discusses several factors that are likely to influence the dollar's medium-term path, what effects a depreciating dollar could have on the economy, and how alternative policy measures that could be taken by the Federal Reserve and the Treasury might influence the dollar's path.

Contents:

Intro

DOLLAR DEPRECIATION: ECONOMIC EFFECTS AND POLICY RESPONSE

Library of Congress Cataloging-in-Publication Data

Contents

Preface

Chapter 1: The Depreciating Dollar: Economic Effects and Policy Response*

Summary

Introduction

Broad Economic Forces that Affect the Dollar

Determinants of the Size and Direction of Cross-Border Asset Flows

Interest Rate Differentials between the United States and Other Economies

Investors' Expectations About the Future Path of the Dollar

Investors Diversifying Their Portfolio of Assets

Other Factors that Influence the International Demand for Dollar Assets

The Size and Liquidity of U.S. Asset Markets

U.S. Asset Markets are Often Seen as "Safe Havens"

The Dollar is the Principal Global "Reserve Currency"

How Will These Determinants Interact to Affect the Dollar?

Likely Effects of Dollar Depreciation

A Smaller Trade Deficit

U.S. International Purchasing Power Decreases

U.S. Net External Debt is Reduced

World Commodity Prices (in Dollars) Tend to Increase

Other Possible Effects of Dollar Depreciation

U.S. Interest Rates Could Increase

Dollar's Reserve Currency Role Could Be Reduced

Risk of a Dollar Crisis Could Be Increased

Policies that Could Influence the Dollar

Does the United States Have a Dollar Policy?

Policies to Influence the Demand for U.S. Assets

Direct Intervention in the Foreign Exchange Market

Monetary Policy

Fiscal Policy and Federal Debt

Policies to Increase the Demand for U.S. Exports

Lower Foreign Trade Barriers

Support for Development of New Products

Indirect Government Influence on the Dollar

Global Imbalances, the Dollar,

and Economic Policy

End Notes

Chapter 2: Dollar Crisis: Prospect and Implications*

Summary.

Introduction

Anatomy of Dollar Crisis

Possible Reasons Why

a Dollar Crisis Won't Occur

Global Savings Glut

Bretton Woods II

Dark Matter

Liquidity Services

Insurance Services

Knowledge Services

The Macroeconomic Effects of a Dollar Crisis

The Response of Economic Policy

Response of U.S. Economic Policy

Response of Foreign Economic Policy

Conclusion

Chapter 3: The Dollar's Future as the World's Reserve Currency: The Challenge of the Euro*

The Rising International Importance of "Official Holdings "

The Roles of a Reserve Currency

Four Factors Influencing Choice of a Reserve Currency

The Current Currency Composition of Official Reserves

Euro vs. Dollar

As a Medium of Exchange

As a Unit of Account

As a Store of Value

Chapter 4: The U.S. Trade Deficit, the Dollar, and the Price of Oil*

Overview

The Dollar and the Price of Oil

Real and Nominal Oil Prices

Major Currencies

The Price of Oil

Oil Exchanges

Oil Demand and Supply

The International Exchange Value of the Dollar

Capital Flows

U.S. Financial Balance

Foreign Exchange Market

The U.S. Trade Deficit

Conclusions

Chapter Sources

Index.

Notes:

Description based upon print version of record.

Includes bibliographical references and index.

Description based on print version record.

ISBN:

1-61470-771-5

OCLC:

923663728