Been meaning to ask this for a while: New Zealand has been running a current account deficit for 27 years. It is now at about 8% of GDP. Sounds dangerous to me, but Treasury and other orthodox economists here (following Friedman) say no need to worry with a floating dollar. Should we worry? Why? Bill Jim Devine wrote: > > Brad describes Stanley Fischer as saying: > >--That tax cuts would surely be accompanied by a tightening of monetary > >policy to try to keep the real GDP growth path unchanged, that such a > >shift in the policy mix would raise the value of the dollar and increase > >the U.S. current account deficit. > > >--That no one looking back at the financial crises that hit countries > >running large current-account deficits in the 1990s and looking at today's > >value U.S. current account deficit could remain calm at the prospect of > >policies designed to widen the U.S. current account deficit further. > > If he's so concerned about the US balance of trade deficit, why isn't he > denouncing the Fed's repeated interest-rate hikes that have encouraged the > dollar to soar, crowding out US exports? Why is he simply blaming the > government? Doesn't he realize that the government has a budget surplus? > > >--That the combination in the U.S. of an extremely low private savings > >rate and what looks like a relatively high marginal social product of > >investment seemed to make the argument for budget surpluses much stronger > >than usual. > > Where does he get the view that investment has a high social product? is > this simply an assumption? or is it the application of Keynesian economics, > a reference to the multiplier effects of investment? does government > investment in education, science, infrastructure, and/or public health have > a similar effect or does Fischer privilege the private sector as the font > of all that is good? if so, what evidence does he have for this assertion? > > >--That everyone should listen very closely to the criticisms of the > >current globalization process offered by Ugandan President Musaveni, one > >of the true heroes of the 1990s and a man who deserves as much credit as > >one individual can take for halting Uganda's downward spiral. > > what does Musaveni say? > > Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine -- The content of this message, unless otherwise stated, is provided in my private capacity and does not purport to represent the University of Canterbury.
