Some icelandic economics

Written by Olafur Margeirsson Monday, 31 October 2011 23:21
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The Icelandic Recovery conference organised by the IMF and the Ministry of Finance in Iceland was not totally the "we did an awesome job in Iceland" thing I halfway expected it to be.

I managed to follow most of the panels through the internet and I have to admit that Shafik from IMF surprised me: she seemed really reasonable, was quoting heterodox economic theory - with care but mentioning it all the same - and although she did seem to be a bit proud of the "feat" of IMF in Iceland, she was not bragging too much about it.

None of the Icelandic participants surprised me that much.

Gylfi Zoega (he taught me Macro II = IS-LM and such at University of Iceland) was wittiest and straightest to the point. His "some people call this lending to connected parties but we call it banking" comment was epic! Gylfi Arnbjornsson surprised me a bit though by making a fool of himself, grasping for clichés such as that the EUR would save the Icelandic economy and such. Most notoriously he said that Icelandic labour unions didn't fear the EUR in case of high inflation and interests in Iceland after EUR adoption - which he and other EUR ideologists think will be impossible - the economy would "just go for an internal devaluation." He said this while on panel with Krugman, too bad the webcast didn't show Krugman's face, I'm sure his jaw dropped down to earth's core when he heard this...

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Ol is the author of the forthcoming book - Bad Economics

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