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Former Commissioner & austerian-in-chief Olli Rehn& #39;s Keynesian turn is remarkable indeed
https://www.ft.com/content/05a12645-ceb2-4cd5-938e-974b778e16e0
I">https://www.ft.com/content/0... think Finland& #39;s (forced) shift from foreign to domestic sources of growth could offer some clues
It also highlights that austerity needs *external enablers*
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🧵" title="Thread" aria-label="Emoji: Thread"> https://twitter.com/paulkrugman/status/1391360507014168577">https://twitter.com/paulkrugm...
https://www.ft.com/content/05a12645-ceb2-4cd5-938e-974b778e16e0
I">https://www.ft.com/content/0... think Finland& #39;s (forced) shift from foreign to domestic sources of growth could offer some clues
It also highlights that austerity needs *external enablers*
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">https://www.socialeurope.eu/german-re...
This is what Germany did: rely on Chinese & US spending & refuse rebalancing
https://www.socialeurope.eu/german-rebalancing-out-of-exit-options">https://www.socialeurope.eu/german-re...
Finland& #39;s misfortune was that
https://abs.twimg.com/emoji/v2/... draggable="false" alt="1⃣" title="Tastenkappe Ziffer 1" aria-label="Emoji: Tastenkappe Ziffer 1"> their export champion company Nokia died
https://abs.twimg.com/emoji/v2/... draggable="false" alt="2⃣" title="Tastenkappe Ziffer 2" aria-label="Emoji: Tastenkappe Ziffer 2"> 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
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 https://abs.twimg.com/emoji/v2/... draggable="false" alt="2⃣" title="Tastenkappe Ziffer 2" aria-label="Emoji: Tastenkappe Ziffer 2"> 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" title="Finland& #39;s misfortune was that https://abs.twimg.com/emoji/v2/... draggable="false" alt="1⃣" title="Tastenkappe Ziffer 1" aria-label="Emoji: Tastenkappe Ziffer 1"> their export champion company Nokia died https://abs.twimg.com/emoji/v2/... draggable="false" alt="2⃣" title="Tastenkappe Ziffer 2" aria-label="Emoji: Tastenkappe Ziffer 2"> 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 https://abs.twimg.com/emoji/v2/... draggable="false" alt="2⃣" title="Tastenkappe Ziffer 2" aria-label="Emoji: Tastenkappe Ziffer 2"> 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" title="Finland& #39;s misfortune was that https://abs.twimg.com/emoji/v2/... draggable="false" alt="1⃣" title="Tastenkappe Ziffer 1" aria-label="Emoji: Tastenkappe Ziffer 1"> their export champion company Nokia died https://abs.twimg.com/emoji/v2/... draggable="false" alt="2⃣" title="Tastenkappe Ziffer 2" aria-label="Emoji: Tastenkappe Ziffer 2"> 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& #39;s trajectory could be that austerity is not a viable option if there are no trading partners on the other side & #39;enabling& #39; 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">https://yalebooks.yale.edu/book/9780...
See @M_C_Klein & @michaelxpettis for more https://yalebooks.yale.edu/book/9780300244175/trade-wars-are-class-wars">https://yalebooks.yale.edu/book/9780...
The argument is explored in my first thesis paperhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">
Comments very welcome
https://palmapolyak.weebly.com/research.html ">https://palmapolyak.weebly.com/research....
Comments very welcome
https://palmapolyak.weebly.com/research.html ">https://palmapolyak.weebly.com/research....
... a reminder about Rehn& #39;s formerly austerian views https://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten"> https://twitter.com/DanielaGabor/status/1125303377104113664">https://twitter.com/DanielaGa...
... and more on the politics of rebalancing in the Eurozone by @stefwalter__ @ariray_ & @niredeker https://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten"> https://global.oup.com/academic/product/the-politics-of-bad-options-9780198857020?cc=ch&lang=en&">https://global.oup.com/academic/...
