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How Nominal Foreign Currency Depreciation Against the U.S. Dollar Affects U.S. Wealth: Working Paper 2018-05

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  • Dorian Carloni

Abstract

Foreign currency depreciation against the U.S. dollar would affect the wealth holdings of U.S. residents in several ways. Specifically, I analyze the effects of a one-time large depreciation of 20 percent. If foreign currencies depreciated by 20 percent against the U.S. dollar, the value of U.S. holdings of foreign assets would decrease by an estimated $2,451 billion and the value of U.S. liabilities to foreigners by $168 billion (values are based on 2015 holdings and values). On net, the total worth of U.S. households would decrease by $2.3 trillion—a drop of 2.2 percent.

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  • Dorian Carloni, 2018. "How Nominal Foreign Currency Depreciation Against the U.S. Dollar Affects U.S. Wealth: Working Paper 2018-05," Working Papers 53931, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:53931
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • F30 - International Economics - - International Finance - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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