Krugman Can't Admit He Was Wrong on Austerity: Latvia PM
Latvia's Prime Minister hit back on Friday at Paul Krugman's criticism of Latvia's austerity measures, saying the Nobel Prize-winning economist has "difficulty admitting his own mistake."
"Krugman famously said back in December 2008 that Latvia is the new Argentina, it will inevitably go bankrupt, and now he has difficulty apparently admitting he was wrong and so he tries to seek some problems in how Latvia is recovering from the economic crisis," Latvian leader Valdis Dombrovskis told CNBC in an interview at the EU summit in Brussels.
"But I think that the mere fact that for the last two years we are enjoying rapid growth shows that it was probably the right strategy."
Latvia's government undertook a heavy dose of austerity after a credit boom led to an economic crash in 2008. The government undertook the biggest fiscal adjustment drive of any country in the European Union and gross domestic product (GDP) plunged 24 percent in 2009.
Latvia's Prime Minister hit back on Friday at Paul Krugman's criticism of Latvia's austerity measures, saying the Nobel Prize-winning economist has "difficulty admitting his own mistake."
"Krugman famously said back in December 2008 that Latvia is the new Argentina, it will inevitably go bankrupt, and now he has difficulty apparently admitting he was wrong and so he tries to seek some problems in how Latvia is recovering from the economic crisis," Latvian leader Valdis Dombrovskis told CNBC in an interview at the EU summit in Brussels.
"But I think that the mere fact that for the last two years we are enjoying rapid growth shows that it was probably the right strategy."
Latvia's government undertook a heavy dose of austerity after a credit boom led to an economic crash in 2008. The government undertook the biggest fiscal adjustment drive of any country in the European Union and gross domestic product (GDP) plunged 24 percent in 2009.