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Sunday, July 29, 2012

'Internal Devaluation, Inflation, and the Euro'

Travel day, so here's a quick one:

Internal Devaluation, Inflation, and the Euro (Wonkish), by Paul Krugman: I’ve been writing for a long time about how the euro area needs more inflation. But I suspect that many readers don’t quite see how this ties into the macro story. So here’s something that may or may not clear things up — a stylized little model linking euro inflation and the adjustment problem to overall monetary policy. It’s very stylized, making some obviously untrue but I think still useful assumptions, and I have been finding that it clarifies my own thinking ...[continue reading]...

    Posted by on Sunday, July 29, 2012 at 02:09 PM in Economics, International Finance | Permalink  Comments (35)


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