Åtstramningspolitikens dilemma En jämförande studie om de interna devalveringarna i Baltikum under eurokrisen

This bachelor thesis examines the internal devaluations in the Baltic States during the euro crisis. The study emphasizes the differences between economists within various opinions about internal devaluations as a tool to prevent economic crisis. Due to the cooperation within EMU, the possibility to devalue the currency has disappeared. To increase the degree of competitiveness in the crisis countries a disciplined austerity policy has become the solution. Developed theories about which factors it is that makes an internal devaluation more or less successful, is limited in earlier investigations. The aim of this study is to show which of the Baltic States that was most successful with their austerity policy and to identify the explanatory variable that has led to the different outcome in the three countries. This bachelor thesis show that massive wage cuts will not necessarily result in a successful internal devaluation. The conclusion is that politicians should focus more on external factors such as export conditions for the crisis countries, before they consider austerity measures