Hacker News new | ask | show | jobs
by wonnor 1364 days ago
The person you are arguing with said this:

>But then you can invest that extra profit in decreasing your foreign currency price, thus becoming more competitive.

1 comments

Yeah, which is baffling. It's not possible to invest in decreasing your foreign currency price. Price is an exogenous variable in a competitive market. You can invest in the production process so that production becomes more cost-effective and this allows you to lower prices, but that has nothing to do with devaluations, and certainly is not the mechanism through which exports prices fall when a currency depreciates.