Krugman’s blog, 12/22/15

There were two posts yesterday.  The first was “Finn de Siecle:”

Bloomberg: Finland Should Never Have Joined Euro, Foreign Minister Says.


Until recently, Spain was the quintessential euro crisis country — a nation that basically did nothing wrong on policy, but was whipsawed by huge capital inflows that then came to a sudden stop., leaving it with the need for extremely costly internal devaluation. Lately Spain has picked up somewhat, both because it has stopped imposing ever harsher austerity and because its relative deflation has finally started to produce some results. But it has been an immensely costly process.

Finland, however, is the kind of problem euroskeptics always worried about: a country hit by an idiosyncratic hit to its exports, a combination of Nokia losing its mojo and weak demand for forest products. The last time Finland faced that sort of hit, from the collapse of the Soviet Union, it was able to stage a strong recovery through devaluation. This time, that wasn’t an option.

So the foreign minister is quite right: Finland shouldn’t have joined. Unfortunately, leaving is a lot harder than never having entered.

Yesterday’s second post was “Saving the World Economy:”

A dialogue with Olivier Blanchard:

Sorry, but I can’t seem to get this to embed properly.




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