Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Prof. Feldstein Has No Recovery Policy
We don’t often disagree with Prof. Martin Feldstein, a distinguished economist, but we do with his opinion piece in the WSJ, 8-1-11 in which he writes, “A falling dollar may be the only major economic change that can accelerate the anemic pace of recovery and prevent a new downturn in U.S. economic activity.” We believe there are a number of good policies that can be easily implemented and that a devaluation of the dollar is not one of them. He believes that a falling dollar will stimulate U.S. exports by making American goods cheaper to foreigners. “The declining dollar has been the key driver of American exports. … Although exports are only 10% of U.S. gross domestic product (GDP), the rise in exports during the past four quarters contributed more than 50% of GDP growth during that period.” We believe the data in the following table belies that assertion.
He does not mention imports although the trade balance, exports minus imports, is what contributes to the GDP and the trade balance was negative and growing during the past four quarters.
Let’s look at the foreign trade data from 2nd quarter 2010 to 2nd quarter 2011.
Last 100 Years
Real Estate Taxation
Journal of Economic Literature:
Atlantic Economic Journal: