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Dollar Overvaluation and the World Economy


  • C. Fred Bergsten
    (Peterson Institute for International Economics)

  • John Williamson
    (Peterson Institute for International Economics)


The dollar rose by about 35 percent in real terms from 1995 through the end of 2001, supporting the booming US economy of the late 1990s but pushing the current account deficit to a record high of almost 5 percent of GDP. This special report provides alternative views of how large a dollar depreciation would be needed to restore a sustainable position (Jim O'Neill, Michael Rosenberg, and Catherine Mann), analyzes the impact of currency misalignments on each of the three major economies (Martin Baily for the United States, William Cline for Japan, and Daniel Gros for Euroland), and discusses the role of exchange market intervention in addressing the issues (Kathryn Dominguez, Edwin M. Truman, and Ernest Preeg).

Suggested Citation

  • C. Fred Bergsten & John Williamson (ed.), 2003. "Dollar Overvaluation and the World Economy," Peterson Institute Press: Special Reports, Peterson Institute for International Economics, number sr16, October.
  • Handle: RePEc:iie:piiesr:sr16 Note: Special Report 16

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    Cited by:

    1. Thomas L. Vollrath & Mark J. Gehlhar & Charles B. Hallahan, 2009. "Bilateral Import Protection, Free Trade Agreements, and Other Factors Influencing Trade Flows in Agriculture and Clothing," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(2), pages 298-317.
    2. Eduardo Wiesner, 2008. "The Political Economy of Macroeconomic Policy Reform in Latin America," Books, Edward Elgar Publishing, number 12913.
    3. Ibarra, David, 2005. "The monetary pendulum in Mexico," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    4. Sebastian Edwards, 2005. "Is the U.S. Current Account Deficit Sustainable? If Not, How Costly Is Adjustment Likely to Be?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 36(1), pages 211-288.

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