Menzie Chinn submits: The dollar is on the rebound against the euro [0], [1]. The non-oil trade deficit is shrinking as a share of GDP [2]. Is this a replay of the 1980's adjustment process? A month ago at a conference in Siena, Gian Maria Milesi-Ferretti outlined the similarities and differences between the two episodes cogently (while the presentation is not online, some of the points are recapped in this speech by IMF DMD Lipsky, here). He summarized the changes in various macro aggregate in the upswing and the downswing of the dollar in the two episodes in two sets of figures.Complete Story »