tag:blogger.com,1999:blog-1331441403058020963.post5573847801071319648..comments2024-03-28T06:49:24.930-04:00Comments on International Political Economy at the University of North Carolina: Department of "Brad DeLong, Please Elaborate"Thomas Oatleyhttp://www.blogger.com/profile/14092437150746625670noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-1331441403058020963.post-23169790381073834542010-03-20T16:05:26.427-04:002010-03-20T16:05:26.427-04:00Thanks, Stewart. But isn't it the case that if...Thanks, Stewart. But isn't it the case that if China spends mostly on domestic goods then they must sell fewer goods to foreigners. If they sell fewer goods to foreigners, then foreigners demand fewer renminbi which counteracts China's lesser demand for dollars? Less demand for and less supply of dollars implies no change in the dollar-RMB exchange rate.Thomas Oatleyhttps://www.blogger.com/profile/14092437150746625670noreply@blogger.comtag:blogger.com,1999:blog-1331441403058020963.post-14808463141023373602010-03-20T14:57:50.409-04:002010-03-20T14:57:50.409-04:00You're assuming that the new Chinese spending ...You're assuming that the new Chinese spending would all be on American (or at least denominated) goods. This is unlikely. Much of the new demand would actually stay in the Chinese domestic economy. Some would be for European goods, and only a portion would flow back to the US in the form of new demand.<br /><br />Net result, the dollar falls. Hopefully not too far, too fast.Unknownhttps://www.blogger.com/profile/00028379679941294713noreply@blogger.com