Exchange Rate Fluctuations and Disaggregated Economic Activity in the US: Theory and Evidence
International Monetary Fund (IMF)
Ida A. Mirzaie
Ohio State University
We examine the extent to which exchange rate fluctuations affect the US sectoral output and price. The evidence indicates that the expansionary and contractionary effects cancel out in determining industrial real output growth in the face of exchange rate fluctuations. More importantly, there is evidence of a reduction in price inflation in several industries, which is statistically significant in Finance, in response to dollar appreciation. This evidence is consistent with the reduction in aggregate demand through the decline in net exports and the increase in aggregate supply through the reduction in the cost of imported intermediate goods.
Number of Pages in PDF File: 31
Keywords: Exchange rate, External exposure, Sectoral activity
JEL Classification: F14, F31, F41, E23working papers series
Date posted: June 12, 2003
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo7 in 0.344 seconds