An empirical analysis of the relation of U.S. dollar exchange rate and American trade balance

Lin Wen

Abstract

From the empirical perspective, the factors that affect U.S. trade balance is not only the U.S. dollar exchange rate, but also the inertia of U.S. trade balance, American relative commodity prices, relative output, etc. What’s more, the inertia of U.S. trade is the main factor that can influence the U.S. trade balance. It’s in vain to adjust U.S. trade balance deficit through the depreciate of U.S. dollar in a short time. It seems more appropriate to use mixed policy except exchange rate.