Data Recovery Increase

What contribution dollar’s world currency status makes towards the US trade and budget deficit?

The US trade and budget deficit have undermined the fragile recovery.However The monetary reliefs from the Fed called QE3 failed to increase bank lending but fueled monetary movement around the world according to the Fed’s data on overseas dollars. So has the dollar’s world currency status worked against the effectiveness of the US’s domestic monetary policy?

I disagree about the influence of the balance of trade on the recovery, but that is not relevant to your first question.

The fact is that no one really knows just how much advantage the U.S. gains from having the dollar as the numeraire. Some have argued the the “exorbitant privilege” is high, others that it is not completely negligible, but low enough to ignore for most practical purposes.

http://delong.typepad.com/sdj/2005/06/gourinchas_and_.html

http://www.voxeu.org/index.php?q=node/4813

http://www.j-bradford-delong.net/movable_type/2003_archives/001993.html

http://www.open-thinking.com/2010/07/recession-and-politics-long-tedious.html

http://krugman.blogs.nytimes.com/2011/01/14/dollareuro-irrelevance/

http://web.mit.edu/krugman/www/seignor.html

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Posted by admin on Sep 7th, 2010 and is filed under Data Recovery.

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