God-ness this stuff gives me a headache.

Doug Henwood dhenwood at panix.com
Mon Jun 17 10:00:20 PDT 2002


pms wrote:


>What does he mean that the 5% rise in the Euro adds .50 tightening?

From the European point of view higher euro = more expensive (and therefore lower) exports = slower growth. Add to that higher euro = cheaper (and therefore more) imports) and you also have slower growth, since imports are a subtraction from GDP. [GDP = consumption + investment + government + net exports, where net exports = exports - imports].

Doug



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