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Sunday, December 09, 2012

'State Costs of the 2008 Icelandic Financial Collapse'

[Three quick ones before hitting the road.] Is Iceland an exception when it comes to bailing out banks?:

State Costs of the 2008 Icelandic Financial Collapse, by Thorolfur Matthiasson & Sigrun Davidsdottir: Outside Iceland it is widely believed that the collapse of the Icelandic financial sector in October 2008 came at no expense to Icelandic taxpayers. This contrasts with taxpayers in Ireland, the UK, Greece, Spain and Portugal, who have recapitalized their banking sectors. However, based on a recent estimate of public funds put into the financial sector since the collapse, we calculate that the cost accruing to the Icelandic State amounts to 20 to 25% of GDP – which means that Iceland cannot be taken as an example of a country that did not bail out any banks. This is of some interest since Iceland is now a popular comparison for economists studying crisis-stricken European countries.

    Posted by on Sunday, December 9, 2012 at 10:59 AM in Economics, Financial System | Permalink  Comments (22)


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