The effects of dollar fluctuations on the United States sectoral output and price.

摘要

Dollar's appreciation is said to be responsible for the recession and increase in unemployment during 80's. Recent appreciation of the dollar because of the US's stable financial market raises concerns regarding the consequences on the US employment and output of industrial production. Some may argue that the government should intervene systematically in foreign exchange markets to stabilize the dollar to protect US employment and output of adverse effects created by exchange rate fluctuations. This view argues that a permanent reallocation of resources among sectors in the long run will lead to a structural change in the US economy.; After a brief literature review, the dissertation is divided into two parts. The first part presents an examination of the long run relationship between the US sectoral output and real value of the dollar using a cointegration approach. We use the recent developments in time series to investigate the long run relationship among variables that affect the US sectoral output. Second part introduces a theoretical approach using rational expectations. We introduce a theoretical rational expectation model that decomposes movement in the exchange rate into anticipated and unanticipated components. The model demonstrates the effects of demand and supply channels on the output and price responses to changes in the exchange rate. This theoretical model underlies the empirical investigations using a simultaneous equation model.; Given demand and supply channels, there is no evidence of a significant effect of the dollar appreciation on industrial output growth. In contrast, demand contraction and supply expansion determine price deflation in several industries, which appears statistically significant in Finance in the face of dollar appreciation. We conclude: given the small degree of openness for industries of the United States, the results of foreign trade and exchange rate fluctuations generate moderate price deflation without significant adverse effects on output growth. Accordingly, concerns about the adverse effects of dollar appreciation on economic performance are not supported by the disaggregate evidence for industries of the United States.