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Is a Declining Dollar Good for Either the U.S. Economy or The Global Ecnomy?


  • Paul Davidson

    (New School University)


This paper explains why a declining dollar is likely to prove deleterious to both the US economy and the Global economy. It provides statistics to demonstrate that despite a 25 percent drop in the dollar in 3 years, the US trade deficit has doubled in value. It explains why this doubling has occurred in terms of the absence of the Marshall- Lerner condition. Finally, the paper provides a new alternative policy perscription that will alleviate the US trade dficit hile promoting more rapid global economic growth for the entire global economy.

Suggested Citation

  • Paul Davidson, 2005. "Is a Declining Dollar Good for Either the U.S. Economy or The Global Ecnomy?," International Trade 0505012, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpit:0505012
    Note: Type of Document - wpd; pages: 24. Paper presented at the Levy Institute Conference, April 2005

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    References listed on IDEAS

    1. Stanley Fischer, 2001. "Exchange Rate Regimes: Is the Bipolar View Correct?," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 3-24, Spring.
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    More about this item


    Marshall-Lerner condition; trade deficits; flexible vs. fixed exchange rates;

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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