Comments on: Why US Current Account Deficit Exists? http://www.economicshelp.org/blog/economics/why-us-current-account-deficit-exists/ Economics Blog - current events and economics essays Thu, 11 Mar 2010 12:11:41 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: USA Trade Deficit with China — Economics Blog http://www.economicshelp.org/blog/economics/why-us-current-account-deficit-exists/comment-page-1/#comment-1255 USA Trade Deficit with China — Economics Blog Mon, 28 Jul 2008 12:39:36 +0000 http://www.economicshelp.org/blog/?p=483#comment-1255 [...] Why US current account deficit exists [...] [...] Why US current account deficit exists [...]

]]> By: Dave http://www.economicshelp.org/blog/economics/why-us-current-account-deficit-exists/comment-page-1/#comment-938 Dave Fri, 02 May 2008 10:50:48 +0000 http://www.economicshelp.org/blog/?p=483#comment-938 Wouldn't a floating exchange rate correct the deficits via the automatic stabilizer? High demands for foreign goods causes a huge supply of the US dollar and subsequently the value of the dollar should fall. A depreciated currency would mean less goods are imported since it would be more expensive, therefore, correcting the deficit. On a side note, is the term "devalue" correct in a floating exchange rate system? I have been told the terms "revalue" and "devalue" only comes in a pegged exchange rate. For a floating system, "appereciate" and depreciate would be used instead. Thanks =) Wouldn’t a floating exchange rate correct the deficits via the automatic stabilizer? High demands for foreign goods causes a huge supply of the US dollar and subsequently the value of the dollar should fall.

A depreciated currency would mean less goods are imported since it would be more expensive, therefore, correcting the deficit.

On a side note, is the term “devalue” correct in a floating exchange rate system? I have been told the terms “revalue” and “devalue” only comes in a pegged exchange rate. For a floating system, “appereciate” and depreciate would be used instead.

Thanks =)

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