NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

How Far Has the Dollar Fallen?

Philippe Bacchetta, Martin Feldstein

NBER Working Paper No. 2122 (Also Reprint No. r0953)
Issued in 1987
NBER Program(s):Economic Fluctuations and Growth, International Trade and Investment, International Finance and Macroeconomics

The present paper introduces a new index of the real value of the dollar relative to 80 other currencies. The individual exchange rates are combined with weights that reflect the recent (1984) multilateral pattern of trade. This new index confirms that the dollar rose very sharply between January 1980 and February 1985 and that about two-thirds of that appreciation was reversed by July 1986. This is true for both our multilateral and bilateral real indices. The analysis also shows that any index that fails to adjust for differences in inflation rates will give a very misleading impression of the dollar's evolution in the 1980s.

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Document Object Identifier (DOI): 10.3386/w2122

Published: Feldstein, Martin and Philipe Bacchetta. "How Far Has the Dollar Faller?" Business Economics, Vol. XXII, No. 4, October 1987, pp. 35-39.

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