Sunday, March 27, 2011

Krugman vs. Krugman

. Sunday, March 27, 2011

I don't get Krugman's logic here:

Things are different for a country that shares a currency with other countries. Ireland can raise employment by cutting wages of Irish workers relative to German workers. But America, with its floating dollar, gains nothing — nothing at all — from overall wage cuts. All we get is a magnified real debt burden.


If that's the case, then why worry about China's currency peg, as he has done for years now? Either their peg helps boost American employment (at the zero lower bound), or it's of no concern for employment. Or Krugman is wrong.

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Krugman vs. Krugman
 
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