Munich Personal RePEc Archive

US Current Account Deficit and Exchange Rate Tax

De Lima, Gabrielle and Moura, Guilherme and Meurer, Roberto and Da Silva, Sergio (2007): US Current Account Deficit and Exchange Rate Tax.

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Abstract

We examine the relationship between the US current account deficit, the international value of the dollar, and the dollar reserves of foreign central banks. We find that the international value of the dollar impacts the US current account and also that dollar depreciations are accompanied by reductions in the inflow of foreign reserves. The inflow reductions are indicative that the US levies an exchange rate tax on foreigners because the foreign stock of reserves loses value.

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