In essence, devaluations are a short-term policy measure, and the long-run benefits of committing not to use often are probably larger than the short-run gains and long-costs of their repeated use, thus, the perception of this cost of the euro, unable to devaluate, is actually a benefit over the long run. Any debate on this?
Wednesday 24 March 2010
and for something completely different, a Finnish joke...
About the Euro and the cost of not being to devaluate because Portugal is in the Euro zone, a Finnish friend mentioned the following joke (I hope I am able to reproduce it properly): - devaluation would be like being in pants in some street of Finland with -21, it keeps the essential parts warm for a short period, it is problem afterwards.
In essence, devaluations are a short-term policy measure, and the long-run benefits of committing not to use often are probably larger than the short-run gains and long-costs of their repeated use, thus, the perception of this cost of the euro, unable to devaluate, is actually a benefit over the long run. Any debate on this?
In essence, devaluations are a short-term policy measure, and the long-run benefits of committing not to use often are probably larger than the short-run gains and long-costs of their repeated use, thus, the perception of this cost of the euro, unable to devaluate, is actually a benefit over the long run. Any debate on this?
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Actually, your Finnish joke is not Finnish and is a bit different in the essence and in the context. It was told by a famous central banker (whose name I cannot recall) that said that inflation is like wetting in your pants: at first, the warm sensation feels nice and comfortable; the problem comes when all the wet parts cool down...
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I decided to post it,
Pedro Pita Barros)