Former Commissioner & austerian-in-chief Olli Rehn's Keynesian turn is remarkable indeed
https://www.ft.com/content/05a12645-ceb2-4cd5-938e-974b778e16e0
I think Finland's (forced) shift from foreign to domestic sources of growth could offer some clues
It also highlights that austerity needs *external enablers*
https://twitter.com/paulkrugman/status/1391360507014168577
https://www.ft.com/content/05a12645-ceb2-4cd5-938e-974b778e16e0
I think Finland's (forced) shift from foreign to domestic sources of growth could offer some clues
It also highlights that austerity needs *external enablers*
https://twitter.com/paulkrugman/status/1391360507014168577
As the euro crisis hit & austerity squeezed demand throughout Europe, the only option to grow AND keep austerity was to rely on partners outside of Europe
This is what Germany did: rely on Chinese & US spending & refuse rebalancing
https://www.socialeurope.eu/german-rebalancing-out-of-exit-options
This is what Germany did: rely on Chinese & US spending & refuse rebalancing
https://www.socialeurope.eu/german-rebalancing-out-of-exit-options
Finland's misfortune was that
their export champion company Nokia died
their main partner outside Europe was Russia (slapped by trade sanctions)
Deprived of enablers, they were forced to rebalance & spend more at home, a highly atypical path in the Eurozone
their export champion company Nokia died
their main partner outside Europe was Russia (slapped by trade sanctions)
Deprived of enablers, they were forced to rebalance & spend more at home, a highly atypical path in the Eurozone
A lesson of Finland's trajectory could be that austerity is not a viable option if there are no trading partners on the other side 'enabling' it. (And this may help explain the shift in Finnish macro policy)
See @M_C_Klein & @michaelxpettis for more https://yalebooks.yale.edu/book/9780300244175/trade-wars-are-class-wars
See @M_C_Klein & @michaelxpettis for more https://yalebooks.yale.edu/book/9780300244175/trade-wars-are-class-wars
The argument is explored in my first thesis paper
Comments very welcome
https://palmapolyak.weebly.com/research.html
Comments very welcome
https://palmapolyak.weebly.com/research.html
... a reminder about Rehn's formerly austerian views https://twitter.com/DanielaGabor/status/1125303377104113664
... and more on the politics of rebalancing in the Eurozone by @stefwalter__ @ariray_ & @niredeker https://global.oup.com/academic/product/the-politics-of-bad-options-9780198857020?cc=ch&lang=en&