For something I’m working on: we know that China is pursuing a mercantilist policy: keeping the renminbi weak through a combination of capital controls and intervention, leading to trade surpluses and capital exports in a country that might well be a natural capital importer. We also know, or should know, that this amounts to a beggar-thy-neighbor policy — or, more accurately, a beggar-everyone but yourself policy — when the world’s major economies are in a liquidity trap.
But how big is the impact? Here’s a quick back-of-the-envelope assessment.
Read Krugman’s analysis here –>
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See Also:
- China’s Multi-Decade Worker Shortage Starts Next Year
- Paul Krugman’s Emergency Jobs Program Will Never Work
- Why Krugman’s "Blame China" Mentality Is Completely Wrong