But because we in the United States finance our current account deficit by borrowing in our own currency, we can move to a more competitive dollar without the adverse effects that followed currency declines in other countries.
More Quotes from Martin Feldstein:
It is certainly something to worry about. Continuing to attract funds when the current account deficit is that large and continuing to rise is bound to become a serious problem.Martin Feldstein
Even if the dollar does decline during the coming months, the delays in the response of exports and imports to the more competitive dollar will mean that the increase in aggregate demand from this source may not happen for a year or more.
Martin Feldstein
After all, an overvalued dollar gives us the ability to buy foreign goods at lower prices. And the existing volume of exports brings more yen and euros than they would if the dollar were more competitive.
Martin Feldstein
A second reason why science cannot replace judgement is the behavior of financial markets.
Martin Feldstein
The good news is that a competitive dollar in the global market and a strong dollar at home are compatible in both the long run and during the transition to a more competitive dollar.
Martin Feldstein
With sound monetary policy, the increases in import prices are offset by lower inflation for domestically produced goods and services.
Martin Feldstein
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