The likely outlook on the value of the US Dollar is dividing opinion among influential economists as the US continues to suffer from growing current account and fiscal deficits, says a new report.
The persistent US fiscal and current account deficits have grown to unprecedented heights, reaching $480bn and $790bn respectively in 2005, causing genuine concerns that a readjustment of the imbalances to a sustainable figure will bring about a collapse of the dollar, triggering a recession in the US and by virtue of globalised trade links, a worldwide economic slump.
The Future of the Dollar – Are the US Current Account and Fiscal Deficits Sustainable?, published by Report Buyer, shows that there appears to be no consensus among economists over the outlook for the dollar which continues to resist economic textbook theory by remaining strong in the foreign exchange market despite the accumulation of huge debts.
“America’s Deficit, the World’s Problem”, as it has been coined, and the resilience of the US dollar in the face of ever mounting debts has since spurred a flurry of academic and research papers, intensely polarising the debate between proponents of a “laissez-faire” strategy who believe things will ultimately settle by themselves and those who think the situation demands immediate policy formulation to avoid an abrupt drop in the value of the dollar.
Our research, summarising some of the opinions of key economic experts including those from Harvard University, Massachusetts Institute of Technology, Berkeley, Morgan Stanley, Goldman Sachs, the US Treasury and the US Federal Reserve, shows an almost equal split of opinion over the dollar’s future
says Jean-Michel Saliba, the report’s author.
The Council of Economic Advisers, a group of academics assisting the Bush Administration, has exonerated the record borrowing binge the US has been on, by considering the willingness of foreign investors to keep on pouring in money to finance US deficits a positive sign for the economy. China, for example, is estimated to be financing between 10% and 20% of the US current account deficit.
It is ironic that, as academia is largely divided over the matter, US economic policy makers seem locked in a hear no evil, see no evil state
remarks Saliba.
One day, the Administration will have to bite the bullet and make a decision
he adds.
The Future of the Dollar – Are the US Current Account and Fiscal Deficits Sustainable? a comprehensive and critical review of the literature on the twin deficits, is part of a series of industry reports available as free downloads from new online business information provider, www.ReportBuyer.com which launches on Wednesday 17 January 2007.
Note to editors:
ReportBuyer.com launched in November 2006 offers books and reports covering the Automotive industry plus Banking & Finance, Computing & Electronics, Energy & Utilities, Food & Drink, Telecoms and Pharma & Healthcare.ReportBuyer.com is part of Piribo Ltd, a UK-based private company, established in September 2004, with Piribo.com, an online retailer of business information for the pharmaceutical and biotechnology sectors,. The piribo.com website is the UK’s largest online biopharma information store, now carrying over 6,000 English language titles including, market reports, studies and books, currently sourced from over 60 publishers.
