News Column

New Economic Research Data Have Been Reported by Investigators at International Monetary Fund

June 6, 2014

By a News Reporter-Staff News Editor at Economics Week -- New research on Economic Research is the subject of a report. According to news reporting originating from Washington, District of Columbia, by VerticalNews correspondents, research stated, "Latvia's boom, bust, and recovery provide a rare case study for macroeconomists: an economy that responded to a balance-of-payments crisis by maintaining its currency peg and adjusting through internal devaluation and front-loaded consolidation. This paper lays down the facts about Latvia's boom and bust and analyzes the policy response and the mechanics of the adjustment through internal devaluation."

Our news editors obtained a quote from the research from International Monetary Fund, "While Latvia's adjustment was very costly, with a large drop in output, a big increase in unemployment, and substantial emigration, it was eventually successful. The internal devaluation worked faster, though quite differently, than what had been expected. Productivity increases, rather than nominal wage cuts, drove much of the unit labor cost reduction. These then led to an increase in profit margins, rather than a decrease in prices, and to a surprisingly fast supply response. The strong front-loaded adjustment did not prevent the recovery."

According to the news editors, the research concluded: "The lessons of the Latvian experience for other countries may however be limited, since many of the elements of the eventual success appear to have been due to factors largely specific to Latvia, factors that are not present in southern euro countries, in particular."

For more information on this research see: Boom, Bust, Recovery: Forensics of the Latvia Crisis. Brookings Papers on Economic Activity, 2013;():325-371. Brookings Papers on Economic Activity can be contacted at: Brookings Inst, 1775 Massachusetts Ave NW, Washington, DC 20036, USA.

The news editors report that additional information may be obtained by contacting O.J. Blanchard, Int Monetary Fund, Washington, DC 20431, United States. Additional authors for this research include M. Griffiths and B. Gruss.

Keywords for this news article include: Washington, United States, Economic Research, District of Columbia, North and Central America

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Source: Economics Week

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