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Permanent link (DOI): https://doi.org/10.7939/R3JM1D

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The US Dollar, Oil Prices and the US Current Account Open Access

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Other title
Subject/Keyword
US dollar, US current account, oil prices, US government debt, global aggregate demand, equity prices, China, portfolio balance model, Error Correction Model, Vector Autoregressive Model
Type of item
Thesis
Degree grantor
University of Alberta
Author or creator
Abdel Razek, Noha
Supervisor and department
Supervisor: Prof. Smith, Constance (Department of Economics), Co-supervisor: Prof. Landon, Stuart (Department of Economics)
Examining committee member and department
Prof. Plourde, Andre (Department of Economics, University of Alberta), Prof. Smith, Todd (Department of Economics, University of Alberta), Prof. Scholnick, Barry (Department of Business, University of Alberta), Prof. Iscan, Talan (Department of Economics, Dalhousie University)
Department
Department of Economics
Specialization

Date accepted
2012-09-14T15:19:47Z
Graduation date
2012-09
Degree
Doctor of Philosophy
Degree level
Doctoral
Abstract
The thesis examines how oil prices and asset stocks affect the US dollar. It also examines the role of different factors postulated in the literature to have caused recent US current account imbalances. In the first two chapters, I study the role of oil prices and the US government debt in determining US dollar movements. In Chapter One, I apply a theoretical portfolio balance model. In Chapter Two, I apply an empirical Error Correction Model. Chapter Two shows that the government debt and oil prices are significant short- and long-run determinants of US dollar movements. The findings of Chapter Two, that increases in the oil price and US government debt cause the US dollar to depreciate, are consistent with the predictions of Chapter One. The negative impact of an oil price increase on the US dollar is consistent, according to the portfolio balance models in Chapter One and in Krugman (1980), with a situation in which oil exporters tend to prefer non-US goods and assets. In Chapter Three, I find, using a Vector Autoregressive model, that the increase in the US government debt did not contribute to the widening of the US current account deficit. Also, in line with Killian et al. (2007), but in contrast to the “global savings glut” view, an oil-price increase improves the US current account balance. This occurs chiefly because a rise in the price of oil reduces US wealth, measured as the Standard and Poor equity index, which promotes US savings. China’s increasing role in the world economy affects the US current account indirectly through the real oil price and the US government debt.
Language
English
DOI
doi:10.7939/R3JM1D
Rights
Permission is hereby granted to the University of Alberta Libraries to reproduce single copies of this thesis and to lend or sell such copies for private, scholarly or scientific research purposes only. Where the thesis is converted to, or otherwise made available in digital form, the University of Alberta will advise potential users of the thesis of these terms. The author reserves all other publication and other rights in association with the copyright in the thesis and, except as herein before provided, neither the thesis nor any substantial portion thereof may be printed or otherwise reproduced in any material form whatsoever without the author's prior written permission.
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