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Impacts of the US dollar (USD) exchange rate on economic growth and the environment in the United States

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  • Lee, Jaeseok
  • Yue, Chengyan
Abstract
This paper investigates the impact of the USD exchange rate on economic growth and the environment in the United States by using a Structural Vector Autoregression (SVAR) model. The analysis is based on quarterly country-level data on the real trade weighted US dollar index, petroleum consumption, renewable energy consumption, net imports of pollution intensive products, real GDP and CO2 emissions during the 1989–2015. The result shows that the USD exchange rate is positively related to petroleum consumption, net imports of the United States in pollution intensive industries with major U.S. trading partners, real GDP and CO2 emissions. Moreover, petroleum consumption increases real GDP and domestic CO2 emission levels, while net imports of pollution intensive products decrease real GDP and does not significantly affect CO2 emissions.

Suggested Citation

  • Lee, Jaeseok & Yue, Chengyan, 2017. "Impacts of the US dollar (USD) exchange rate on economic growth and the environment in the United States," Energy Economics, Elsevier, vol. 64(C), pages 170-176.
    • Handle: RePEc:eee:eneeco:v:64:y:2017:i:c:p:170-176
    DOI: 10.1016/j.eneco.2017.03.006
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    3. Chang, Tsangyao & Hsu, Chen-Min & Chen, Sheng-Tung & Wang, Mei-Chih & Wu, Cheng-Feng, 2023. "Revisiting economic growth and CO2 emissions nexus in Taiwan using a mixed-frequency VAR model," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 319-342.
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    5. Munir Ahmad & Gul Jabeen & Syed Ahsan Ali Shah & Abdul Rehman & Fayyaz Ahmad & Cem Işik, 2022. "Assessing long- and short-run dynamic interplay among balance of trade, aggregate economic output, real exchange rate, and CO2 emissions in Pakistan," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(5), pages 7283-7323, May.
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    7. Jaeseok Lee & Jongmin Yu, 2017. "Market Analysis during the First Year of Korea Emission Trading Scheme," Energies, MDPI, vol. 10(12), pages 1-13, November.

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    More about this item

    Keywords

    Structural Vector Autoregression (SVAR); USD exchange rate; Pollution intensive industries; International trade; Energy consumption; Economic growth; Environment;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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