The Impact Of The U.S. Dollar’s REER On The U.S.Commodity’s Trade

After the disintegration of the Bretton Woods system, the United States’Trade Balance has been in the trade deficit. In order to improve the foreign trade deficit, the United States adopted a policy of the U.S. dollar exchange rate depreciation. For the first time the huge depreciation of the dollar was from1985to1988after he "Plaza Agreement" was signed the. The second dollar huge devaluation was from2002to2008after the U.S. technology bubble burst. But the huge devaluation of the dollar has not been able to achieve an effective improvement of the U.S. foreign trade deficit. Began in the U.S. subprime mortgage crisis triggered a global financial crisis in2007, the formation of the attacks on the U.S. domestic economy and foreign trade, many economists have proposed the exchange rate depreciation policy to improve the U.S. external deficit. But the devaluation of the dollar exchange rate policy whether can achieve the ultimate realization, is still an open question.In this context, this paper analyzes the Impact of the U.S. dollar’s REER on the U.S. commodity’s trade. Firstly, this paper reviews the theoretical literature, which is the theoretical basis for the descriptive analysis and empirical analysis below. Chapter III statistically analyzes the relationship between the U.S. dollar’s real effective exchange rate and U.S. commodity’s trade balance of payments, commodity’s trade structure as well as US-China trade, but the analysis fails to find a significant relationship between the dollar real effective exchange rate and the U.S. commodity’s trade. Chapter IV conducts respectively the empirical analysis:First of all, this paper selects the10countries which is the largest American trade partner to carry out the panel Empirical analysis. From the analysis we find that depreciation of U.S. dollars’ real effective exchange rate is able to improve American’s trade balance of payments, but the degree of improvement is small, and compared with the primary goods, the degree for manufactured goods is smaller. Second, this paper selects the10largest U.S. commodity’s trade deficit countries to conduct time series’analysis. From the analysis we find that depreciation of U.S. dollars’real effective exchange rate is able to change the country sort. Finally, this paper conducts time series’analysis of the US-China commodity’s trade balance of payments. From the analysis we find that depreciation of U.S. dollars’real effective exchange rate is able to the improve US-China commodity’s trade balance and the impact on different commodity is different. At the end, this paper concludes the foregoing analysis and puts forward some relevant policy recommendations.