[lbo-talk] GS on the dollar

[Michael Pollak]

>DAILY FINANCIAL MARKET COMMENT 05/20/03 Goldman Sachs Economics
>
>* Today's comment takes a statistical look at the likely impact of the
>dollar on net exports.  We estimate that the depreciation seen to date
>should be just about sufficient to stem the deterioration in the real
>trade balance over the next few quarters.  Thus, net trade should become
>a neutral rather than negative factor for growth.

Two questions:

1) Doesn't the J-curve dictate that the trade balance should get worse
before it gets better when the dollar falls?  Wouldn't that be covering
exactly these next two quarters?

2) When they say the dollar's fall should be just enough to to stem the
deterioration of the trade balance, they're not saying it's enough to make
it any better, right? Just that it won't get any worse.  That it'll
"stabilize" at the current negative $600 bln annually?

Michael