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Modeling the Effect of the Market Access Charge on Exchange Rates, Interest Rates and the US Economy

October 05, 2020

This Working Paper examines the impact of the proposed Market Access Charge (MAC) on international capital inflows into the US economy and the domestic US economy. We build a model including the relationships between US capital flows, the dollar exchange rate, US trade, and the US domestic economy. Our conclusion is that a 5% MAC would realign the dollar to a current account balancing exchange rate, balance trade and stimulate the US economy, generating an additional $1 trillion of GDP, over 4 million additional jobs, and more than $300 billion of additional revenue for the US Treasury. 

By Steven L Byers, PhD. and Jeff Ferry

This Working Paper builds on our previous Working Paper, Quantifying Economic Growth and Job Creation from a competitive Dollar (2019), which showed the relationship between a realigned dollar exchange rate and key US economic variables including GDP and employment. In this Working Paper, we establish relationships between the MAC, international capital flows, and the dollar exchange rate. 

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working paper

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