The Effects of a Stronger Dollar on U.S. Prices

24 Pages Posted: 28 Jan 2016  

Federico J. Díez

Federal Reserve Bank of Boston

Gita Gopinath

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: 2015-12-01

Abstract

Since 2014:Q3, the U.S. dollar has experienced the third-fastest appreciation in over 30 years, with its nominal exchange and real exchange rate rising 15 percent against almost all foreign currencies (as measured by the Major Currencies Dollar Index). This sudden and rapid gain has engendered concerns about how a stronger dollar will affect U.S. export and import prices and ultimately, consumer prices and inflation in the United States. This paper assembles a rich database, spanning the period from 1985:Q1 through 2014:Q4, that combines several measures of prices and exchange rates in order to examine the likely outlook for U.S. import and export prices and consumer prices in the short run (one quarter) and over a 24-month period.

Keywords: exchange rates, pass-through, inflation

JEL Classification: E31, F31, F41

Suggested Citation

Díez, Federico J. and Gopinath, Gita, The Effects of a Stronger Dollar on U.S. Prices (2015-12-01). Federal Reserve Bank of Boston Research Paper Series Current Policy Perspectives Paper No. 15-9. Available at SSRN: https://ssrn.com/abstract=2723813

Federico J. Díez (Contact Author)

Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

Gita Gopinath

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Paper statistics

Downloads
32
Abstract Views
300