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Is Strong Dollar Enhancing Economic Growth?

Author

Listed:
  • Deergha Raj Adhikari

    (Department of Economics and Finance, University of Louisiana at Lafayette, LA - USA)

  • S.P. Uma Rao

    (University of Louisiana at Lafayette, LA - USA)

  • Denis Boudreau

    (University of Louisiana at Lafayette, LA - USA)

Abstract

In this study, we measure the real output effect of the appreciation in the value of US dollar measured by US dollar index (USDI). Our dependent variable is percentage change in US real GDP and the independent variable is percentage change in US dollar index. We applied the vector error correction model on those variables using US data from 1974 to 2019. We found that any increase in US dollar index would negatively affect US real GDP with a one-period lag. So, we concluded that a strong dollar would have a negative impact on US economy.

Suggested Citation

  • Deergha Raj Adhikari & S.P. Uma Rao & Denis Boudreau, 2026. "Is Strong Dollar Enhancing Economic Growth?," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 79(2), pages 187-198, May.
    • Handle: RePEc:ris:ecoint:022477
    DOI: 10.65644/EIIE.079.02.0187
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    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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