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The dollar: a reader responds


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November 19, 2004

The dollar: a reader responds

Greenspan's unhappy with the decline in the dollar. And a reader takes strong exception to my glass-is-half-full analysis:

"Your pollyanna-ish, cheerleading article is glaring in its lack of supporting evidence which a good reporter avoids like the plague.

"For instance you claim that a devaluation of the dollar might 'increase the goods the US exports' but you don't indicate which goods are these and which are their associated price eleasticities of demand (hint :it has to be higher than one) that would allow that to happen.

"Let me remind you that 1-There is not such automatic relationship between a devaluation and an increase in exports for any economy.This is a myth propagated by mediocre journalists and is nothing but simply badly digested neo-classical American economic theory and empirically pretty discredited by now.2-The US doesn't export a lot of goods susceptible to greater foreign demand such as shoes, clothing, TVs, computers, video games, Play Stations, belts, rings, food items (amazingly the U.S. is becoming a net importer of food now) etc. The biggest export items are heavy industrial capital goods such as elevators, big construction cranes, big trucks, passanger planes, etc., whose demand is more foreign income rather than price dependent.

"Lets stop the cheerleading and start doing some serious research here.

Sincerely

Cristobal Senior

NYC "

01:11 PM

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