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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
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Martin Feldstein
Age: 79 †
Born: 1939
Born: November 25
Died: 2019
Died: June 11
Economist
Former Chairman Of Council Of Economic Advisers
Professor
University Teacher
New York City
New York
Martin S. Feldstein
Martin Stuart Feldstein
Dollars
Dollar
Gives
Existing
Ability
Volume
Giving
Competitive
Euros
Would
Lower
Overvalued
Goods
Exports
Foreign
Euro
Brings
Prices
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First, I think the science of monetary economics has clearly gotten better.
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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.
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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.
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A second reason why science cannot replace judgement is the behavior of financial markets.
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We pay some price when necessary to bring down inflation but that price is temporary and is not large relative to the permanent gain from reduced inflation.
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