Strong dollar can be bad for trade – BIS paper

Textbook theory does not always hold due to the effect of global value chains, authors say


A strong dollar can be bad for global trade, in contrast to the standard theory found in economics textbooks, Valentina Bruno and Hyun Song Shin say in new research.

In their Bank for International Settlements working paper, Bruno and Shin investigate the role of global value chains (GVCs), the supply chains necessary to produce final goods. Each link of the chain requires finance, often in US dollars.

The authors note that a strong dollar will, according to the standard textbook view, boost

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