How Far Has the Dollar Fallen?

La Follette School Working Paper Series No. 2005-003

22 Pages Posted: 28 Sep 2005

See all articles by Menzie David Chinn

Menzie David Chinn

University of Wisconsin, Madison - Robert M. La Follette School of Public Affairs and Department of Economics; National Bureau of Economic Research (NBER)

Date Written: February 15, 2005

Abstract

It is widely known that the dollar has fallen relative to its peak in 2002. However, the extent of the decline depends upon the composition of the basket of currencies used in calculating the dollar's value. Further, the appropriate index depends upon the question being asked, with the type of price deflators used - if any - dependent upon the question at hand. Various measures of the dollar's value are discussed, and compared, including alternative weights based on liabilities and assets, instead of the standard trade flow weights.

Keywords: effective exchange rate, competitiveness, the trade deficit, asset and liability valuation effects

JEL Classification: F31, F41

Suggested Citation

Chinn, Menzie David, How Far Has the Dollar Fallen? (February 15, 2005). La Follette School Working Paper Series No. 2005-003, Available at SSRN: https://ssrn.com/abstract=805470 or http://dx.doi.org/10.2139/ssrn.805470

Menzie David Chinn (Contact Author)

University of Wisconsin, Madison - Robert M. La Follette School of Public Affairs and Department of Economics ( email )

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