Although economists have studied the sensitivity of import and export volumes to changes in the exchange rate, there is still much uncertainty about just how much the dollar must change to bring about any given reduction in our trade deficit.

We are particularly poor at the open economy issues.

Even if the dollar does decline during the coming months, the delays in the response of exports and imports to the more competitive dollar will mean that the increase in aggregate demand from this source may not happen for a year or more.

Domestic inflation reflects domestic monetary policy.

We pay some price when necessary to bring down inflation but that price is temporary and is not large relative to the permanent gain from reduced inflation.

After all, an overvalued dollar gives us the ability to buy foreign goods at lower prices. And the existing volume of exports brings more yen and euros than they would if the dollar were more competitive.

But then in April of 1985 the dollar began a sharp decline. The dollar's trade weighted value fell 23 percent in just 12 months and by a total of 37 percent by the beginning of 1988.

I think that over the last few decades, we have seen better economic outcomes than in the past.

Although economists have studied the sensitivity of import and export volumes to changes in the exchange rate, there is still much uncertainty about just how much the dollar must change to bring about any given reduction in our trade deficit.

First, I think the science of monetary economics has clearly gotten better.

But the primary reason for wanting the dollar to become more competitive in the near future is that we may need an increase in exports this year and in 2007 to sustain the economy's current pace of expansion.

The more competitive value of the dollar turned around the trade deficit.

Increased government spending can provide a temporary stimulus to demand and output but in the longer run higher levels of government spending crowd out private investment or require higher taxes that weaken growth by reducing incentives to save, invest, innovate, and work.

A second reason why science cannot replace judgement is the behavior of financial markets.

But because we in the United States finance our current account deficit by borrowing in our own currency, we can move to a more competitive dollar without the adverse effects that followed currency declines in other countries.

The price of imported oil in the US doubled between summer 2003 and summer 2005, reducing consumers' purchasing power by more than 1 per cent of gross domestic product.

The good news is that a competitive dollar in the global market and a strong dollar at home are compatible in both the long run and during the transition to a more competitive dollar.

A rise in the level of saving can reduce aggregate activity temporarily but only a sustained high level of saving makes it possible to have the sustained high level of business investment that contributes to the long-run growth of output.

Homeowners who refinanced their mortgages took out cash and reduced their monthly payments at the same time. Much of the cash obtained by refinancing was spent on consumer durables, home improvements and the like.

And finally, no matter how good the science gets, there are problems that inevitably depend on judgement, on art, on a feel for financial markets.

An increase in the relative price of products from the low wage manufacturers in Asia and Latin America will also make those products less attractive to American consumers.

Thirty years ago, many economists argued that inflation was a kind of minor inconvenience and that the cost of reducing inflation was too high a price to pay. No one would make those arguments today.

To finance this trade deficit, the U.S. has to borrow from the rest of the world or sell American assets like stocks, businesses, and real estate to the rest of the world.

The only way that we can reduce our financial dependence on the inflow of funds from the rest of the world is to reduce our trade deficit.

Unless the trade deficit shrinks, the combination of the trade deficit and the interest and dividend payments to foreigners will grow ever more rapidly.

My theme this evening is that America needs a competitive dollar.

In short, both experience and economic theory imply that the US could now t to a more competitive dollar without experiencing either increased inflation or decreased economic growth.

So just as I want pilots on the planes that I fly, when it comes to monetary policy, I want to think that there is someone with sound judgement at the controls.

Inflation is lower and more stable and the real business cycle fluctuations are more modest.

If the Federal Reserve pursues a strong dollar at home while the dollar becomes more competitive in global markets, we can achieve both price stability and a more balanced path of economic growth.

We used to think that revolutions are the cause of change. Actually it is the other way around: change prepares the ground for revolution.

I must stress here the point that I appreciate clarity, order, meaning, structure, rationality: they are necessary to whatever provisional stability we have, and they can be the agents of gradual and successful change.

Excuses change nothing, but make everyone feel better.

So, first you have to be able to play with a metronome. Then you take your freedom. If you play in an orchestra, you got to watch the conductor, he is like a metronome, but it is more difficult because he can change rhythms.

I wouldn't change Buffy for anything and I wouldn't change the course in which she has evolved but it is nice to be able to do something that is a little different.

For example, UNICEF works with governments to change legislation such as in India where a law was passed raising the age of compulsory school completion to keep children in school and away from the workplace for longer.

Great joy, especially after a sudden change of circumstances, is apt to be silent, and dwells rather in the heart than on the tongue.

I still feel that a movie has to attempt to say something - even if it fails miserably. But I've sort of given up on believing that I'm going to change the world with every film I choose to act in.

Don't knock the weather; nine-tenths of the people couldn't start a conversation if it didn't change once in a while.

You don't have to be the Dalai Lama to tell people that life's about change.

I knew that my staying up would not change the election result if I were defeated, while if elected I had a hard day ahead of me. So I thought a night's rest was best in any event.

It will always be a battle a day between those who want maximum change and those who want to maintain the status quo.

Being a father, well, I don't know if this is a change, but it makes me want to get out of here faster. Get off the clock. Just 'cause the baby is my reason for living, my reason for coming to work.

A liberal knows that the only certainty in this life is change but believes that the change can be directed toward a constructive end.

I was born not knowing and have had only a little time to change that here and there.

In their search for quality, people seem to be looking for permanency in a time of change.

The game has kept faith with the public, maintaining its old admission price for nearly thirty years while other forms of entertainment have doubled and tripled in price. And it will probably never change.

One day I actually took the list into the bathroom and I put it up against my face and looked in the mirror and I realized I had one of two choices, change the list or change myself.

But the real focus should be on people who are buying today because the base is so big it will take a long time for any change materialize on an overall basis.