[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-321960-105":59,"doc-detail-321960-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","exchange-rates-real-or-nominal-economic-commentary","Exchange Rates, Real or Nominal? - Economic Commentary","","This Economic Commentary analyzes whether exchange-rate policy can improve the international competitiveness of U.S. manufacturing. It argues that monetary policy cannot change competitiveness by manipulating exchange rates: temporary nominal depreciation would raise inflation, eventually eroding any trade advantage and discouraging foreign investment. The piece distinguishes nominal exchange rates from real exchange rates, explains how indexes are constructed, and examines why the dollar’s appreciation and related overvaluation claims do not straightforwardly justify corrective policy action.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/exchange-rates-real-or-nominal-economic-commentary/321960/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/exchange-rates-real-or-nominal-economic-commentary/321960.png","ImageObject",300,407,{"name":92,"@type":93},"Rowan","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-29","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",13,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"Why does this commentary claim monetary policy cannot improve U.S. manufacturing competitiveness through exchange-rate manipulation?","Question",{"text":113,"@type":114},"Because even if easing leads to initial nominal depreciation, higher inflation would eventually offset trade gains and reduce foreign investment. Any temporary advantage to trade would come at the expense of investment.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"What is the difference between nominal and real exchange rates in the document?",{"text":118,"@type":114},"Nominal exchange rates reflect published values, while real exchange rates adjust for relative prices by comparing nominal movements against inflation at home and abroad. Real exchange rates better gauge relative performance of U.S. exports and imports.",{"name":120,"@type":111,"acceptedAnswer":121},"Why do the arguments about an “overvalued” dollar not necessarily support a corrective policy response?",{"text":122,"@type":114},"Deviations from the metric used to label the dollar overvalued can persist for many years and are consistent with a well-functioning foreign-exchange market. The U.S. also offers a more attractive investment climate, drawing foreign savings that support appreciation on both nominal and real bases.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},321960,1790119003,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":105,"preview_page_count":4},1099514067415,"https://ap-avatar.wpscdn.com/avatar/100002539d78ffe74a7?x-image-process=image/resize,m_fixed,w_180,h_180&k=1779092875211072502","Owen F.Humpage  \nAn inflow of foreign savingshelpedfinance an investment boom in theUnited States between 1995 and 2000.Despite a slowdownin U.S.economicactivity over the past three quarters,inter-national investors still view the UnitedStates as a relatively safe,promising placefor their savings.They continue to pur-chase U.S.financial instruments.Thesubstantial dollar appreciation that hasaccompanied this financial inflow,how-ever,has put domestic firms that exportor that compete directly withimports at acompetitive disadvantage.Recently,someobservers,including the National Associ-ation of Manufacturers,have suggestedthat the dollar is “overvalued”and Fed-eral Reserve should ease monetary policyfurther to correct the situation.  \nThis Economic Commentary argues thatmonetary policy cannot alter the intema-tional competitiveness ofU.S.firms bymanipulating exchange rates.Whateverwe might gain in terms of an initial nom-inal depreciation,higher inflation wouldeventually erode,and any temporaryadvantage to trade would come at theexpense of investment.Moreover,offi-cial currency transactions that do notaffect the money supply—the so-calledsterilized interventions that were preva-lent in the late 1980s and early 1990s—have little effect on exchange rates.Atbest,the central bank can influencefirms'competitiveness only by keepinginflation stable and low.  \nMoney,Manufacturing,and theStrong Dollar  \n# ■ Exchange Rates,Realor Nominal?\n\nTounderstand these arguments,one mustfirst recognize the difference betweennominal exchange rates—those publishedin the Wall Street.Journal—and realexchange rates,a concept that economistsconstruct.The overall international com-petitiveness of U.S.manufactured goodsdepends not on the behavior of nominalexchange rates,but on movements innominal exchange rates relative to prices.Real exchange rates offer such a compari-son and,therefore,provide a better gaugeof international competitiveness.  \nThe Board of Governors realizes theimportance of this distinction and con-structs both a Nominal Dollar ExchangeRate Index and a Real Dollar ExchangeRate Index for a broad sample of U.S.trading partners.'Although both indexesmake comparisons with the same set ofcountries,their movements differ sub-stantially.Since the breakdown of theBretton Woods fixed exchange rate sys-tem in 1973,the Nominal Dollar Indexhas steadily appreciated about 400 per-cent,but the Rea Dollar Index hasdemonstrated sustained appreciationsand depreciations with no obvious over-all trend(see figures I and 2).  \nThe real exchange rate offers more infor-mation about the relative performance ofU.S.exports and imports than the nomi-nal exchange rate.The nominal indextracks changes in the dollar's averageexchange value relative to our 26 mostimportant trading partners,including theeuro area.The real index adjusts thenominal index for inflation at home and  \nJuly 2001*  \nUS.firms are facing tough internationalcompetition,and the US.trade deficithas grown to a level that some findalarming.Why doesn't the UnitedStates respond by easing monetarypolicy to lower the dollar's exchangerate and reduce the price ofUS.goodsin foreign markets?This Commentaryargues that monetary policy is incapableof improving the competitive position ofU.S.manufacturing through exchangerate manipulation.The temporary gainsmonetary easing might achieve througha nominal dollar depreciation would beoffset by higher inflation and decreasedforeign investment.  \nabroad.Basically,it constructs a ratiowith the U.S.Consumer Price Index inthe numerator and a trade-weightedaverage of foreign consumer priceindexes in the denominator,and multi-plies this ratio by the nominal index.TheReal Dollar Index will appreciate if thenominal exchange rate appreciates andU.S.and foreign prices stay constant;ifinflation in the United States exceedsinflation abroad and the nominalexchange rate stays constant;or if somecombination of these two events occurs.Even if the United States returned to asystem of","cbCaibkoG0nczQfK","https://ap.wps.com/l/cbCaibkoG0nczQfK","pdf",1350216,"English","# Exchange Rates, Real or Nominal?\n## Savings, Investment, and the Dollar\n## Overvalued?","[{\"question\":\"Why does this commentary claim monetary policy cannot improve U.S. manufacturing competitiveness through exchange-rate manipulation?\",\"answer\":\"Because even if easing leads to initial nominal depreciation, higher inflation would eventually offset trade gains and reduce foreign investment. Any temporary advantage to trade would come at the expense of investment.\"},{\"question\":\"What is the difference between nominal and real exchange rates in the document?\",\"answer\":\"Nominal exchange rates reflect published values, while real exchange rates adjust for relative prices by comparing nominal movements against inflation at home and abroad. Real exchange rates better gauge relative performance of U.S. exports and imports.\"},{\"question\":\"Why do the arguments about an “overvalued” dollar not necessarily support a corrective policy response?\",\"answer\":\"Deviations from the metric used to label the dollar overvalued can persist for many years and are consistent with a well-functioning foreign-exchange market. The U.S. also offers a more attractive investment climate, drawing foreign savings that support appreciation on both nominal and real bases.\"}]","Exchange Rates, Real or Nominal? - Economic Commentary | PDF",1789960690]