And a bit on the IMF’s revised forecast for the US.
From Reuters, “U.S.’s Paulson praises China on currency progress”:
And a bit on the IMF’s revised forecast for the US.
From Reuters, “U.S.’s Paulson praises China on currency progress”:
At the risk of losing my audience by skipping over the the record housing price decline, and an outsized drop in the consumer confidence index, I’m going to focus on what seems like old news (but is being reflected in current news on the dollar), namely the OECD reduction in growth forecasts for the G-7 economies. The euro area economy is slated to do better than the US economy in 2008H1, but that’s not saying much.
Currently, net exports are one of the few bright spots in the US economy. As Krugman points out, this is the one area where monetary policy is proving effective: by driving down the value of the dollar, expenditure switching is being induced.
That’s the title of a post in today’s WSJ RealTime Economics:
President George W. Bush said in an interview today with Nightly Business Report that the dollar’s fall to record lows against the euro is not a good thing and he “absolutely” wants a stronger dollar. Excerpts:
As the dollar continues to plumb new depths [0], and the economic slowdown continues, I want to discuss two questions about the trade balance that occur to me.
As the dollar hits a new low against the euro [0], some thoughts on what arguments make sense, given our knowledge of the statistical properties of real exchange rates.
Some people have the impression that financial capital zips to wherever the returns are highest. Maybe that’s the case. But I’m not sure.
Some thoughts on what to make of the trade and export/import price releases.
The latest GDP release suggests trade balance adjustment is proceeding. Some of the adjustment is being driven by changes in the dollar’s value. But I think a lot seems to be coming from the reduction in consumption and income growth.
In an post in VoxEU, Shang-Jin Wei alluded to work we have undertaken examining whether de facto exchange rate regimes have an impact on current account reversion.