How Far Has the Dollar Fallen?
La Follette School Working Paper Series No. 2005-003
22 Pages Posted: 28 Sep 2005
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: Suggested Citation
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