"This was a very bad thing for Europe, because Germany's failure to adjust magnified the cost of austerity."
What are the responsibilities for managing risk in a system with a shared currency? How is this worrisome in a more globalized economy? How can risk be managed more effectively?
Article:
http://www.nytimes.com/2013/11/04/opinion/krugman-those-depressing-germans.html?ref=opinion
It seems like Krugman's argument is (unsurprisingly) very Keynesian, we need to spend to stimulate market activity if we want to get out of this recession. I don't know if you can't make much of an argument for Germany having responsibility internationally to clear their Current Account, they should after all protect their own interests first. However, they certainly have an obligation towards their Euro-Zone neighbors. This is tricky to do though, because each country in the Euro-Zone has somewhat different needs. This is where I think he maybe a little simplistic, Germany needn't take the same measures as its struggling neighbors.
ReplyDeleteInteresting... Yeah, there's definitely a lot going on that we must consider.
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