À beira do afundanço (9)
1.º - ECB Advocates Tightening as U.S. Urges Domestic Demand Growth link
2.º - Merkel’s Cabinet Backs ‘Decisive’ Cuts as U.S. Urges Spending link
3.º - A Good Crisis, Wasted link
4.º - Lost Decade, Here We Come link
5.º - Europeans Fear Crisis Threatens Liberal Benefits link
6.º - Consultora britânica aconselha a Grécia a sair do euro link
7.º - How High Can the Retirement Age Go? link
8.º - Europe's 750 billion euro bazooka link
9.º - Hungary, Despite Comparisons, Is No Greece link
10.º - Países do euro exigem reformas estruturais a Portugal link
2.º - Merkel’s Cabinet Backs ‘Decisive’ Cuts as U.S. Urges Spending link
3.º - A Good Crisis, Wasted link
4.º - Lost Decade, Here We Come link
5.º - Europeans Fear Crisis Threatens Liberal Benefits link
6.º - Consultora britânica aconselha a Grécia a sair do euro link
7.º - How High Can the Retirement Age Go? link
8.º - Europe's 750 billion euro bazooka link
9.º - Hungary, Despite Comparisons, Is No Greece link
10.º - Países do euro exigem reformas estruturais a Portugal link
Etiquetas: crise euro, economia
1 Comments:
The Global Transmission of European Austerity
Some thoughts on the fiscal austerity mania now sweeping Europe: is anyone thinking seriously about how this affects the rest of the world, the US included?
We do have a framework for thinking about this issue: the Mundell-Fleming model. And according to that model (does anyone still learn this stuff?), fiscal contraction in one country under floating exchange rates is in fact contractionary for the world as a whole. The reason is that fiscal contraction leads to lower interest rates, which leads to currency depreciation, which improves the trade balance of the contracting country — partly offsetting the fiscal contraction, but also imposing a contraction on the rest of the world. (Rudi Dornbusch’s 1976 Brookings Paper went through all this.)
Now, the situation is complicated by the fact that monetary policy is up against the zero lower bound. Nonetheless, something much like this transmission mechanism seems to be happening right now, with the weakness of the euro turning eurozone fiscal contraction into a global problem.
Folks, this is getting ugly. And the US needs to be thinking about how to insulate itself from European masochism.
Paul Krugman , conscience of a liberal, NYTimes 09.06.10
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