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Germany’s lack of reciprocity

Krugman, P., (2013), “Germany’s lack of reciprocity”, The New York Times, 12 Νοεμβρίου.

Huge tensions over the ECB rate cut, with a split on the board and many German economists protesting. As usual, a lot of it is about the perception that those lazy southern Europeans are getting a free ride:

A commentary by the chief economist of the financial weekly Wirtschaftswoche called the decision a “diktat from a new Banca d’Italia, based in Frankfurt”.

Why can’t those Italians etc. pull up their socks the way we did?

What Germans — economists as well as the general public — still don’t seem to get is how much Germany’s success at emerging from its late-90s doldrums depended on a somewhat inflationary boom in southern Europe. And they therefore also don’t realize how much damage Germany is imposing by refusing to allow higher eurozone inflation.

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