If the Federal Reserve pursues a strong dollar at home while the dollar becomes more competitive in global markets, we can achieve both price stability and a more balanced path of economic growth. Martin Feldstein achievebalancecompetitive Change image and share on social
But the primary reason for wanting the dollar to become more competitive in the near future is that we may need an increase in exports this year and in 2007 to sustain the economy's current pace of expansion. Martin Feldstein competitivecurrentdollar share on social
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 aggregatecomecompetitive share on social
Although economists have studied the sensitivity of import and export volumes to changes in the exchange rate, there is still much uncertainty about just how much the dollar must change to bring about any given reduction in our trade deficit. Martin Feldstein bringchangedeficit share on social
A second reason why science cannot replace judgement is the behavior of financial markets. Martin Feldstein behaviorfinancialjudgement Change image and share on social
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 abilitybringbuy share on social
A rise in the level of saving can reduce aggregate activity temporarily but only a sustained high level of saving makes it possible to have the sustained high level of business investment that contributes to the long-run growth of output. Martin Feldstein activityaggregatebusiness share on social
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 accountadverseborrow share on social
Thirty years ago, many economists argued that inflation was a kind of minor inconvenience and that the cost of reducing inflation was too high a price to pay. No one would make those arguments today. Martin Feldstein agoargueargument Change image and share on social
