This paper focuses on some fundamentals of economic analysis and the empirical record that have been extensively ignored in discussions of exchange rates and U.S. trade in the 1980s.It addresses both the issue of why an appreciation of the dollar was associated with the relatively strong...

During the 1980s, policy advisers were successful in promoting the view that movements in the value of the dollar have an inverse relationship to U.S. international competitiveness. This article explains their hypothesis, as well as the counterargument that exchange rates positively reflect a...