Give Me Your Tired, Your Poor, Your Hungary

2010. augusztus 05. 08:15

Hungary is pursuing a harsh, seemingly endless austerity program, and keeping interest rates relatively high.

2010. augusztus 05. 08:15
„I’m a little late getting to this report on Hungary’s loss of patience with austerity; it should be read in conjunction with this terrific Fistful of Euros piece from a few weeks ago that I meant to link but never got around to, Scenes from an internal devaluation.

Basically, Hungary is pursuing a harsh, seemingly endless austerity program, and keeping interest rates relatively high, in an effort to support its currency. This in turn is considered essential because (a) Hungary wants to join the euro (b) there’s great fear that a devaluation of the forint would cause big debt problems, because so much Hungarian private-sector debt is in other currencies — euros, and even Swiss francs.

About (a), I guess the question is at what price? About (b): there’s a major logical fallacy in this whole line of argument. I tried to point it out in a post last year about Latvia.”
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eperke
2010. augusztus 05. 09:59
Prof Krugman, sorry but you are not entirely aware of the situation in Hungary, so please stop giving us advice. Your theory only looks good on paper but would not work in real life.
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