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> I'd say, the smaller the country is, the more it does work like you househould budgets. Very small countries using somebody else's currency, works very much s
by moooo99 3y ago
> I'd say, the smaller the country is, the more it does work like you househould budgets. Very small countries using somebody else's currency, works very much so.
The size isn’t that relevant. The degree of the autonomy over one’s monetary and fiscal policy is much more important. It certainly applies to big economies like the US. But it also applies for other economies that issue their own currency. At least it does for goods that are produced domestically
- riffraff 3y agoBut the degree of autonomy is influenced by size. For example, if the US and Eurozone decide to increase their interest rates this causes capital to fly from smaller countries with an independent currency, which causes their currency to devalue, which (generally) causes inflation, which forces them to increase their interest rate. Yeah it should not have an effect on locally produced goods, but unless you're both an industrial and an energy power house you are going to import a lot of stuff so you still get inflation.