Nothing like a good wonky throw-down:
What seems like an arcane squabble over relative growth rates between Iceland and Latvia has erupted into an argument between two heavyweight voices on economic policy—the Council on Foreign Relations (CFR) and Paul Krugman. Obscure though it may be, their disagreement is important. It is actually a proxy for a much bigger debate on whether external devaluation (followed by Iceland and supported by Krugman) or harsh internal austerity measures (pursued by some Baltic countries as well as much of Europe right now) is the better strategy for getting out of the slump afflicting many countries in the region. It is therefore important to understand and settle the numbers. In this post, I demonstrate that CFR was wrong in how it presented the numbers and that the medium-term economic performance of the Baltic countries relative to Iceland is neither as good as CFR implied nor as bad as those who sided with Krugman.
Hit the link for the thrilling conclusion.