How likely are the risks of a crash of the U.S. dollar triggered by foreign investors reduced willingness to lend to the U.S. and accumulate U.S. assets?

To Purchase This Material Click below Link

http://www.tutorialoutlet.com/all-miscellaneous/how-likely-are-the-risks-of-a-crash-of-the-u-s-dollar-triggered-by-foreign-investors-reduced-willingness-to-lend-to-the-u-s-and-accumulate-u-s-assets

FOR MORE CLASSES VISIT

www.tutorialoutlet.com

Release and Historical Data.” Download the H.10 release Foreign Exchange rates
(weekly data
available). What has happened to the value of the U.S. dollar relative to the Canadian
dollar,
Japanese yen, and Danish krone since June 25, 2010?
Using the information above, what has happened to the value of U.S. dollar relative to
the
British pound and the euro? Note: The H.10 release quotes these exchange rates as
U.S. dollars
per unit of foreign currency in line with long-standing market convention.
(b). Go to the website for Federal Reserve Economic Data (FRED):
http://research.stlouisfed.org/fred2/. Locate the monthly exchange rate data for the
following:
(1) Canada (dollar), 1980-present
(2) China (yuan), 1999-2004, 2005-2009, 2009-2010, and 2010-present
(3) Mexico (peso), 1993-1995 and 1995-present
(4) Thailand (baht), 1986-1997 and 1997-present
(5) Venezuela (bolivar), 2003-present
Look at the graphs and make your own judgement as to whether each currency was
fixed (peg
or band), crawling (peg or band), or float relative to the U.S. dollar during each time
frame
given.
2. The U.S. Current Deficits
Note: To answer the following questions, you may find that it would be helpful
(although it’s not
required) to read articles provided in the reading list, such as Bernanke (2005), Yang
(2012), Roubini
and Setser (2004), and Mann (2002).
(a). Make a chart of the U.S. current account deficit, both in absolute $ value and as a
share of GDP
from 1990 to present. Find the most recent estimate of the U.S. current account
deficit for the
next two quarters (Note: depending on the availability of actual data. If actual data is
available
up to the third quarter of 2016, you should look for the estimate for 2016Q4 and
2017Q1).
(b). For the same sample period (1990-present), chart the evolution of the net
foreign assets of the
U.S. (NIIP) and decompose the total NIPP in the part that is the net stock of foreign
direct
investment from the part that is the rest (portfolio, banks, other forms of debt).
(c). Discuss the evolution of the U.S current account deficit and net foreign assets:
how much of the
evolution of the deficit (as a share of GDP) is due to changes in private savings, public
savings (fiscal deficits) and investment rate (all as a share of GDP) and how much has the role
of
different factors changed over time?
(d). Based on this analysis, are the U.S. current account and external debt
sustainable? Does the U.S.
differ or not from emerging markets or not and why?
(e). How likely are the risks of a crash of the U.S. dollar triggered by foreign investors
reduced
willingness to lend to the U.S. and accumulate U.S. assets?
(f). Will the U.S. dollar strengthen or weaken in the next 2 years and relative to which
currencies
and why?
Data on Savings, Investment and Current Account (on a quarterly and annual basis)
are available
from the Bureau of Economic Analysis;

Data on nominal GDP - to take ratios of savings, investment and current account as a
share of GDP
- are also available from the BEA.
Note that the way BEA presents the data on the current account is slightly confusing;
instead of
referring to the current account, it refers to Net Lending or Net Borrowing (implicitly
from/to the
rest of the world). So, the item representing such Net Lending or Net Borrowing is
our definition
current account.

the Row 1 gives you gross savings. Row 21 gives you gross investment. Row 35 gives
you the
current account deficit, where the current account deficit is the item that is defined
(as I explained
above) as Net Lending or Net Borrowing (Row 35). Row 42 gives you the statistical
discrepancy
that should be added to Saving to have an item that is Savings (net of the statistical
discrepancy).
3
So, for example in 2011 Q1:
CA = S - I
-489 = (2316.8 - 44.1) - (2761.7)
where 2761.7 is the sum of gross domestic investment (2761.1) and the item called
"capital account
transactions" (0.6), i.e. I or Investment is the sum of lines 21 and 28 (Gross Domestic
Investment
plus Capital Transactions). Data on the net foreign assets of the United States can be obtained from the table on
the (Net)
International Investment Position (NIIP) of the United States published in the Survey
of Current
Business, Bureau of Economic Analysis, U.S. Department of Commerce.