At 07:18 PM 9/27/00 -0700, you wrote:
>Jim, how important is the exchange rate for imports? I suspect that it is
>a major influence on exports since U.S. goods compete directly with those
>from other similar countries. We have our largest trade imbalance with
>China. Chinese wages are so low that an increase in the relative costs
>would hardly be enough to displace imports. It could cause production to
>flee China for an even lower cost region, but I wonder how much U.S.
>imports would be changed.
My point was that the high dollar exchange rate encourages low dollar
prices of imported goods, including raw materials, helping to avoid
inflation in the US. To me, the extent to which the high dollar is
encouraging US imports or is hurting US exports is secondary. Either way,
the high dollar is a major factor helping to explain the US trade deficit
and the US current account deficit.
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
