Re: Stiglitz on Soros

[paul davidson <pdavidson@xxxxxxx>]

At 10:38 PM 5/13/02 , Leigh wrote:

> For example, lets say two countries, A and B have expansionary policies in
> place that cause excess demand.  In the case of country A, it has a good
> credit rating and the rest of the world is prepared to lend to it.  It
> experiences current account deficits.


DEar Leigh: I have never beaten  my wife --so do not a "When did you stop
beating your wife question such as the following:

> Country B, on the other hand, does not have a good international credit
> rating.  It cannot go into debt internationally to pay for goods to meet the
> excess demand in its economy.  As a result, it has a shortage of goods
> relative to the money trying to buy goods and so experiences hyper
> inflation; but no current account deficit.


Here you are assuming both nations are already at fully employment and then
government policy creates "excess demand" -- while I am tlking about the
real world -- where almost no country is even near full employment and yet
persistent imports exceeding exports (e.g., Argentina, ) continue to occur.

Paul