n an effort to reduce the rate (Boyd, 1986).
Although the high value of the dollar in international currency exchange in the first half of the 1980s attracted the foreign money the US required to finance its burgeoning and enormous governmental budget deficits without reigniting double digit inflation, it also exacted high costs in the domestic economy of the country. The balance of trade suffered grievously; jobs lost to other countries caused both unemployment and underemployment in the US to be far higher than should have been expected in a recovery; and real interest rates zoomed to record or near record highs.
In August 1985, both the Administration and the Federal Reserve recognized that something had to be done to lower the level of the dollar in international currency exchange. Agreements on loosely coordinated actions were reached with the other major western industrial countries, and by early 1986, the value of the dollar in international currency exchange had dropped significantly (Boyd, 1986).
After about two years, the lower valued dollar began to have some impact on the country's international trade deficit, in that the magnitude of the monthly deficits, when annualized, indicated that, while the country would continue to experience trade deficits for an extended number of years, the trend in the magnitude of the deficits would now be downw
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