> I refer here not only to retaliations and beggar-thy-neighbor
> policies (to which Mark was perhaps averring) but the possibility
> that by limiting the supply of dollars abroad through tariffs and the
> other import restrictions meant to protect declining industries--and
> this seems to be what Godley is proposing--the dollar's value will
> probably increase and thus put added pressure on US exports.
Except the paper says "_In the very last resort_, the United States should
not forget that nondiscriminatory measures to control imports . . . are
permitted under Article 12 of the successor to GATT." (Whether you believe
such measures can be non-discriminatory is another matter.) The authors
argue that the best case scenario is that the U.S.' private financial
balance wouldn't revert, and growth would continue at about 3%, in which
case, Indonesian textile workers are about where they are now. As others
have pointed out, the authors' emphasis here and elsewhere is on fiscal and
tax policy needed to sustain growth. They also suggest that other countries
could engage in some coordinated reflation, were there but world enough and
institutions.
Would like the Nelson, Ostry, and Eisner refs.
Christian
