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The consequence of such migratory flows is deflation in Spain, which makes Spain's debts to Germany even harder to pay in nominal terms as Spain's nominal GDP contracts.

So you still need fiscal transfers...

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman

by Migeru (migeru at eurotrib dot com) on Tue Jan 25th, 2011 at 06:38:35 AM EST
[ Parent ]
Yes, and as Krugman reminded us, the US does fiscal transfers.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Jan 25th, 2011 at 08:30:36 AM EST
[ Parent ]
And Germany within itself.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Jan 25th, 2011 at 08:54:45 AM EST
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