The Power of Money: How the U.S. Dollar Constrains Executive Actions

Abstract

Modern presidents exploit ambiguities in the constitution to justify exercising power far beyond those envisioned by the Founders. Recent work demonstrates that the American public poorly constrains the expansion of executive unilateral authority. We argue that when the public and the constitution do not check executive power, the economic consequences of executive orders might. Using a unique dataset that combines leading economic indicators with data from the U.S. Policy Agendas Project, we show that executive orders have an immediate impact on the exchange rate of the U.S. dollar. Executive orders on topics that do not seem directly associated with the economy also influence the value of the U.S. currency. When considering unilateral action, the modern president must consider the economic impact of these decisions.