In Short, Both Experience And Economic Theory

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.

An Increase In The Relative Price Of Products From The Low Wage Manufacturers In Asia And Latin America Will Also Make Those Products Less Attractive To American Consumers.

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.

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.

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.