In addition, we see a) the "hysteresis effect" (which came to the fore in the 1980s). When the dollar goes up, factories are shuttered. When it falls, it's often very hard to re-open them.
b) a falling dollar means that imported raw materials become more expensive, which undermines the effect of depreciation on competitiveness in product markets. I think that the constancy of the Yuan is the most crucial part, though. Jim Devine > -----Original Message----- > From: PEN-L list [mailto:[EMAIL PROTECTED] On Behalf Of > Eubulides > > http://news.ft.com/cms/s/6b2db674-9a53-11d9-a094-00000e2511c8.html > US exporters fail to reap benefits of lower dollar > By Christopher Swann in Washington > Published: March 21 2005 21:54 | Last updated: March 21 2005 21:54 > > When the US dollar reached its peak three years ago Kendig Kneen, > whose Indiana-based business makes car crushers and landfill > equipment, all but abandoned foreign sales. > > Now after a 30 per cent fall in the currency, Kendig is once again > expanding overseas. "The noose of the strong dollar has been removed > from our neck," he says. "But it is still far from comfortable out > there." > > Many economists are equally ambivalent about the performance of US > exports over the past year. Despite the dollar's slide, US companies > are still losing market share and appear to be finding some export > markets an uphill struggle. Last year total world imports excluding > the US rose 11.3 per cent while US exports rose by just 8.5 per cent > in real terms.
