Monday, November 12, 2007

Krugman on the Dollar and Current Account Adjustment

. Monday, November 12, 2007

I do like it when Paul Krugman uses his platform to talk about the things he knows best, in this case, current account adjustment and the falling dollar. It also is not everyday that one sees a public discussion about the savings-investment gap, so it's worth checking out for that reason alone..

Krugman has written two recent blog posts on this topic, one that emphasizes the need for a depreciating dollar in conjunction with rising savings, and another on the reasons for the dollar's current slide. The basic message is that current account adjustment without recession requires a rise in savings and a fall in the dollar. He elaborates these views in greater detail in a recent Economic Policy article (a shorter piece apparently derived from this by Robert Baldwin is also available).


Krugman on the Dollar and Current Account Adjustment




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