The appreciation of the Dollar is more or less neutral on US growth – Natixis
|Monetary policy is now far more restrictive in the United States than in the eurozone, Japan or China. This has led to a sharp appreciation of the dollar against all other currencies. Analysts at Natixis seek to determine whether the appreciation of the dollar is hurting the US economy.
Is the United States suffering from the appreciation of the Dollar?
“In the recent period, US exports have grown faster than global trade. Econometric analysis shows an elasticity of -0.18 of US exports in volume terms to the Dollar’s real trade-weighted exchange rate.”
“In the recent period, imports have grown more than domestic demand. Econometric analysis shows a zero elasticity of US imports in volume terms to US domestic demand.”
“Econometric analysis shows an elasticity of US import prices of -0.21 to the Dollar’s nominal trade-weighted exchange rate.”
“The appreciation of the Dollar worsens foreign trade in volume terms by the same amount as it reduces import prices. It is, therefore, neutral overall for US growth.”
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