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Pain in Spain

Paul Krugman (2008ko Ekonomia Nobel Saria) 2009/12/17 The New York Times lotura

And yet more on wages and employment. In response to this post, one commenter asks why I say that wages need to fall in Spain. The answer lies in point (3):

3. What about international competitiveness? We have a floating exchange rate. An across-the-board wage cut should be reflected in an equal rise in the dollar, wiping out any competitive gain.

We — that is, the United States — have a floating exchange rate. Spain, however, being part of the euro zone, does not. Its wages are too high compared with those of other eurozone members, now that the housing boom and massive capital inflows are over. If Spain still had a peseta, I’d say devalue it; since it doesn’t, wages have to give.


abendua 20, 2009 - Posted by | Ekonomia | , , , ,

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