Ronald McKinnon, professor of international economics, Stanford University, contests the so-called conventional wisdom on the matter of exhange rates and trade deficits in a new working paper added to the CS Research Room.

France is said by some to be no friend to the United States on matters geopolitical, but when it comes to foreign exchange it’s hard to imagine a more obliging partner. Granted, the current French aid to the dollar is incidental, courtesy of Gallic independence in the form of France’s rejection of the European Union’s constitution on Sunday. But from a trader’s perspective, a rose by any other name would smell as sweet.

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