Dollar's value linked to US productivity
A more productive United States workforce indirectly enhances the dollar's value, research published by the San Francisco Federal Reserve finds.
Positive productivity differentials raise United States consumption and investment relative to the rest of the world, and deteriorate net exports. And this results in an appreciation of both the real exchange rate and the United States terms of trade. The research also finds that demand shocks appreciate the value of the dollar, but have a negligible
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