With sound monetary policy, the increases in import prices are offset by lower inflation for domestically produced goods and services.
More Quotes from Martin Feldstein:
U.S. imports have contributed to the growth of output and employment in many countries around the world.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
Increased government spending can provide a temporary stimulus to demand and output but in the longer run higher levels of government spending crowd out private investment or require higher taxes that weaken growth by reducing incentives to save, invest, innovate, and work.
Martin Feldstein
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.
Martin Feldstein
We do not understand the links between asset prices, monetary policy, and aggregate demand. We do not understand speculative markets adequately.
Martin Feldstein
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