Meaning: This quote by Martin Feldstein, a prominent economist, addresses the issue of the United States' current account deficit and its implications for the value of the U.S. dollar. The current account deficit refers to the situation where a country's total imports of goods, services, and investments exceed its total exports. This deficit must be financed, and in the case of the United States, this is done by borrowing in its own currency, the U.S. dollar.

Feldstein suggests that because the United States finances its current account deficit by borrowing in its own currency, it has a unique advantage compared to other countries. This advantage lies in the ability to adjust the value of the U.S. dollar in order to make it more competitive in international trade without suffering adverse effects that often accompany currency declines in other countries.

The concept of a "more competitive dollar" refers to the idea that a lower value of the U.S. dollar relative to other currencies can make U.S. goods and services more affordable and attractive in the global market. This, in turn, can help reduce the current account deficit by potentially increasing U.S. exports and decreasing imports.

Feldstein's assertion that the United States can move to a more competitive dollar without adverse effects is rooted in the fact that since the U.S. borrows in its own currency, a weaker dollar can make U.S. assets more attractive to foreign investors. Additionally, the U.S. has greater flexibility in managing its exchange rate and monetary policy compared to countries that borrow in a foreign currency.

It is important to note that currency depreciation, while potentially beneficial for export competitiveness, can also have negative implications such as higher import costs, inflationary pressures, and potential capital outflows. However, Feldstein's argument focuses on the unique position of the United States due to its ability to finance its deficit in its own currency.

The quote reflects the broader discussion around exchange rates, international trade, and current account imbalances. It underscores the complexities and nuances involved in managing a country's currency and trade relationships, especially in the context of global economic dynamics and interdependencies.

In conclusion, Martin Feldstein's quote highlights the distinctive position of the United States in financing its current account deficit and the potential advantages it holds in adjusting the value of the U.S. dollar. It emphasizes the significance of understanding the implications of currency movements and international borrowing for a country's economic competitiveness and trade dynamics.