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Understanding the Strength of the Dollar

Author

Listed:
  • Zhengyang Jiang
  • Robert J. Richmond
  • Tony Zhang

Abstract

We link the sustained appreciation of the U.S. dollar from 2011 to 2019 to international capital flows driven by primitive economic factors. We show that increases in foreign investors’ net savings, increases in U.S. monetary policy rates relative to the rest of the world, and shifts in investor demand for U.S. financial assets contributed approximately equally to the dollar’s appreciation. We then quantify the impact of potential future demand shifts for U.S. assets on the value of the dollar.

Suggested Citation

  • Zhengyang Jiang & Robert J. Richmond & Tony Zhang, 2022. "Understanding the Strength of the Dollar," NBER Working Papers 30558, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30558
    Note: AP IFM
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    More about this item

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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