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Nobel Prize in Economics criticized the common currency between Argentina and Brazil: "It is a terrible idea"


The economist questioned the idea because, being different economies, it could suffer 'asymmetric shocks'.

The Nobel Prize winner for Economics, Paul Krugman, spoke of the initiative for a common currency between Argentina and Brazil: "

It is a terrible idea,"

he declared.

“With everything else that is happening, I have not commented on the proposal for a monetary union between Argentina and Brazil.

But it is a good opportunity to apply the theory of optimal currency areas,

which tells us that this is a terrible idea

,” Krugman, who received the 2008 Nobel Prize in Economics, said via Twitter.

Krugman followed up on his idea in a thread: 

"A shared currency can make sense between economies that are each other's main trading partners and are similar enough not to face large 'asymmetric shocks'. So, here is the destination of Brazil's exports," he said.

In that same post, the economist, with 27 books of his authorship, continued: "

Argentina sends more to Brazil, because the Brazilian economy is bigger, but still only 15%.

And the structure of exports of the two countries is very different”.

“Argentine exports are basically all agricultural;

more than half of the Brazilian ones are manufactured or fuel.


shocks to the world economy are likely to cause large changes in the equilibrium real exchange rate,

” Krugman added.

"I don't know who came up with this idea, but

surely it wasn't someone who knew a little about international monetary economics

," he concluded.

A week ago and in the midst of the visit of the president of Brazil, Inacio Lula Da Silva, another who had spoken about it via networks was the owner of Tesla, Elon Musk.

The reaction of the also owner of Twitter was in favor. 

"Probably a good idea

," he tweeted days ago.

But for MIT professor emeritus and former IMF chief economist Olivier Blanchard:

"This is crazy,"

he tweeted.


look too

Pepe Mujica met with Lula and questioned the creation of a common Mercosur currency: "We're going to the great thing right away"

Source: clarin

All business articles on 2023-01-30

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