Latvia: a lesson to us all? New pro and new con | beyondbrics

Latvia: a lesson to us all? New pro and new con | beyondbrics:

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Latvia is a small country perched on the northern fringe of the European Union but its remarkable experience during the economic crisis has made it a favourite talking point among economists.

They debate whether it made sense for the country to stick with its peg to the euro and undergoing a severe internal devaluation instead of unpegging and allowing the lat to depreciate, and whether that risky choice qualifies Latvia to serve as an example to other troubled EU countries.

The latest entry into the growing Latvian crisis literature is a paper called Boom, Bust, Recovery – Forensics of the Latvia Crisisby Olivier Blanchard, Mark Griffiths and Bertrand Gruss of the IMF, which takes a close look at the Latvian experience and concludes that the country has undergone a surprisingly strong return to growth following its internal devaluation and a return to competitiveness."

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