Europe: The Failure of Internal Devaluation

Quite apart from the resolution of debt and banking/credit problems, differences in competitiveness, and external account imbalances, are central considerations impacting on the success or failure of the European experiment with a common currency.  This short article looks beyond simple cross-country  comparisons of unit labour cost trends and evaluates the role that austerity policies have […]

Does Latvia Give Us Any Clues?

Short answer: yes, as long as global trade growth is negligible. Over the weekend I came across a December CEPR paper about the Latvian economy. Authors Mark Weisbrot and Rebecca Ray highlight the Latvian experience with internal devaluation, which may prove to be a case study for the current Eurozone model of internal devaluation by the […]