Given all the worries concerning the Eurozone right now, I thought it might be appropriate to post a link to this.
Author: Kevin O’Rourke
Economic history has lost two giants in the past month: first François Crouzet, and now Angus Maddison. Maddison was a larger than life character and a committed Hibernophile who will be impossible to replace. Both men will be greatly missed.
Paul Krugman and Robin Wells have a lengthy discussion of Reinhart and Rogoff here.
From Wolfgang Schäuble, in the FT:
Should a eurozone member ultimately find itself unable to consolidate its budgets or restore its competitiveness, this country should, as a last resort, exit the monetary union while being able to remain a member of the EU.
If you wanted to set up a system which maximised the probability of self-fulfilling market panics and speculative attacks, this sounds like a good way to go about it.
Barry and I have updated our graphs here.
To recall: the red lines show what happen when governments respond to a worldwide economic crisis with monetary and fiscal stimulus. The blue lines show what happens when governments stick to monetary and fiscal orthodoxy. All very purgative and morally satisying no doubt, except that it led directly to the election of Adolf Hitler (something that I have been meaning to blog about for a while, but now I have to prepare for class..)