Abstract
The popular explanation for the US trade deficits of the early 1980s is that the large US fiscal deficits have led to an increase in interest rates on US bonds; foreign investors then sharply increased their demand for these bonds and the US dollar appreciated sharply and the US trade deficit soared. Thus, the sharp rise in real interest rates since the beginning of the decade is due primarily to the dramatic increase in the level of current and future structural budget deficits’ (Feldstein, 1985).
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© 1989 Donald R. Hodgman and Geoffrey E. Wood
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Aliber, R.Z. (1989). US Fiscal Deficits and the Foreign Exchange Value of the US Dollar. In: Hodgman, D.R., Wood, G.E. (eds) Macroeconomic Policy and Economic Interdependence. Studies in Banking and International Finance. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-19678-4_5
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DOI: https://doi.org/10.1007/978-1-349-19678-4_5
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