Macroeconomics: fixed exchange rate regime, external and internal devaluation, international competitiveness, comparison to ongoing eurozone periphery problems.
The main audience for this case is undergraduate students in economics and business or graduate students in business or political science related studies. More particularly, the case suits a class on applied macroeconomics or general economic policy.
The case investigates economic development in Latvia since it gained independence, the key focus is overheating in 2004-2007 and consequential extraordinary economic crisis of 2008-2009. This case gives a great starting point to discuss ongoing problems in peripheral eurozone (PIGS) in terms of internal versus external devaluation.
Students are expected to learn the differences between external and internal devaluation as well as a country's international competitiveness factors. Also, class discussion of similarities and differences between Latvia and PIGS should make students more aware of two types of devaluation.
Teaching notes are available. Please consult your librarian for access.
