Learning from small countries? Contemporary Nordic sagas
Learning from small countries? Contemporary Nordic sagas

Author(s): Daniel Gros
Subject(s): National Economy, Supranational / Global Economy
Published by: CEPS Centre for European Policy Studies
Keywords: post-2008 Economic Crisis; Baltic States;
Summary/Abstract: Greece, the Baltic states and Iceland are examples of small countries whose experience is often adduced to argue for or against austerity. Paul Krugman, for example, argues that the fact that Latvian GDP is still more than 10% below its pre-crisis peak shows that the “austerity cum wage depression” approach does not work and that, Iceland, which was not subject to Brussels austerity and devalued its currency, seems to be much better off. Others have pointed out that Estonia avoided a financial crisis because it pursued a strict austerity policy in the wake of the crisis and is now growing vigorously again, whereas Greece, which delayed its fiscal adjustment for too long, experienced a deep crisis and is still mired in recession.

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