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Corresponding Author:
Deergha Raj Adhikari, Department of Economics and Finance, University of Louisiana at Lafayette, LA - USA

Coauthors:
S.P. Uma Rao, University of Louisiana at Lafayette, LA - USA
Denis Boudreau, University of Louisiana at Lafayette, LA - USA

Is Strong Dollar Enhancing Economic Growth?

March 17, 2025
JEL classification: E01; E22; F31; F43
Keywords: US Dollar Index; US Real Output; Vector Error Correction

Abstract

In this study, we measure the real output effect of the appreciation in the value of US dollar measured by US dollar index (USDI). Our dependent variable is percentage change in US real GDP and the independent variable is percentage change in US dollar index. We applied the vector error correction model on those variables using US data from 1974 to 2019. We found that any increase in US dollar index would negatively affect US real GDP with a one-period lag. So, we concluded that a strong dollar would have a negative impact on US economy.


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Bibliography

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