CEPII, Recherche et Expertise sur l'economie mondiale
Trump and the Dollar in the Reflection of History

Michel Aglietta
Virginie Coudert

Fears of disruption in international relationships, raised by Trump’s access to power, have been confirmed by his first half-year in office. Uncertainty has spread in international relationships. Surprisingly few in-depth studies in political economy have been made to define “Trumponomics” and to analyze the economic consequences of implementing his intentions for the US and the world. Since the question pertains to radical uncertainty, the usual quantitative methods and indicators go astray. Financial markets are not at ease with political uncertainty. In this environment, the financial community takes refuge in denying that business as usual might be derailed. However, it may be useful to raise a lively debate in political economy to figure out the rising forces of change that might trigger the unraveling of the financial globalization founded with Reaganomics in the 1980s that spread all over the world with the Washington Consensus. We will first question the consistency of Trump’s revealed intents. Do they amount to a coherent doctrine? What might be the economic consequences? What type of dilemma will he face? To deepen the analysis, we will resort to history. Can Trumponomics be compared to Reaganomics? Both have claimed to overhaul social relationships in emphasizing supply-side economics. Revisiting the consequences of Reaganomics gives clues for assessing the pitfalls that can undermine Trumponomics, since the initial economic and financial conditions are opposite to those that prevailed when Reagan took office. Finally, the third part of the paper will try to assess the consequences for the world and for Europe if Trump’s policy triggers a dual rise in US interest rates and in the dollar.

 Mots-clés : Trumponomics | Supply Side Economics | Bond Market Crash | Dollar Appreciation

 JEL : E62, E65, F31, H62
CEPII Policy Brief
N°2017-17,  2017

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 Domaines d'expertise

Monnaie & Finance