The dollar rose by about 35 percent in real terms from 1995 through
the end of 2001, supporting the booming US economy of the late
1990s but pushing the current account deficit to a record high of
almost 5 percent of GDP. This special report provides alternative
views of how large a dollar depreciation would be needed to restore
a sustainable position (Jim O'Neill, Michael Rosenberg, and
Catherine Mann), analyzes the impact of currency misalignments on
each of the three major economies (Martin Baily for the United
States, William Cline for Japan, and Daniel Gros for Euroland), and
discusses the role of exchange market intervention in addressing
the issues (Kathryn Dominguez, Edwin M. Truman, and Ernest Preeg).
General
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