US

Early 1980

• Between Sep 77 - Oct 78, US Dollar fell 16% against major currencies, caused by rising oil prices (inflation) and sluggish economic growth that pushed the US from a trade surplus to a trade deficit. The weaker dollar helped boost the price of imports, and inflation jumped to over 8% from 6%. On oct 6 78, the Fed strangle inflation by targeting growth in money supply. The inflation went down and eventually bolstered the dollar but the price is high: the deepest recession since the Great Depression.
• Stimulative effects of budget deficit help to push the dollar and trade deficit. But in 85-87, dollar plunged 40% vs major currencies, yields on Treasury bonds jumped 2 percentage points, and stock prices plunged 30% in Oct 87.
• Early 2005: inflation low.

1978	Jan 2005
US Current Account deficit < 1% of GDP	6%
Have net foreign asset of equal to 9% of GDP	Net liabilities equal to 27% of GDP
Inflation is high	Inflation is low

Japan

India

• Election
  • May 2004

    Condition during election:

    The economy is expected to grow more than 8% this year thanks to a booming farm sector and a strong showing in the services industry. The country's foreign exchange reserves have swelled to over $100bn and the stock market has recorded its biggest annual rise in over 10 years. Inflation and interest rates are low. India's economic growth still does not help absorb the huge numbers of people required to tide over its vast unemployment problem.