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
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
In short, both experience and economic theory imply that the US could now t to a more competitive dollar without experiencing either increased inflation or decreased economic growth. Martin Feldstein competitivedecreasedollar 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
Homeowners who refinanced their mortgages took out cash and reduced their monthly payments at the same time. Much of the cash obtained by refinancing was spent on consumer durables, home improvements and the like. Martin Feldstein cashconsumerdurable share on social
Unless the trade deficit shrinks, the combination of the trade deficit and the interest and dividend payments to foreigners will grow ever more rapidly. Martin Feldstein combinationdeficitdividend Change image and 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
