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Managing Financial Crisis: The Case of Iceland and Latvia

Author

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  • Hilmar Tór HILMARSSON

    () (University of Akureyri, Iceland)

Abstract

Iceland and Latvia were hard hit by the 2008 global economic and financial crisis. Iceland was the first country hit and Latvia was the hardest hit country. In Iceland the national currency depreciated sharply while Latvia’s national currency remained pegged with the Euro. Both countries cut their fiscal budgets. Latvia implemented a severe austerity program while Iceland’s priority was to protect its welfare system. The reactions of these two small countries has received international attention and continues to be cited among scholars when debating how best to manage such devastating events. After more than five years since the crisis hit policy outcomes are emerging. Both economies now enjoy healthy GDP growth. Latvia’s policy during the crisis was costly in human terms and Latvia still suffers from high rate of unemployment, poverty, social exclusion and high income inequality. In Iceland unemployment is low and the welfare system appears to have protected the most vulnerable relatively well compared with other countries in the European Economic Area.

Suggested Citation

  • Hilmar Tór HILMARSSON, 2014. "Managing Financial Crisis: The Case of Iceland and Latvia," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 15(2), pages 200-214, May.
  • Handle: RePEc:rom:rmcimn:v:15:y:2014:i:2:p:200-214
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    File URL: http://rmci.ase.ro/no15vol2/05.pdf
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    References listed on IDEAS

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    1. Anders Aslund & Valdis Dombrovskis, 2011. "How Latvia Came through the Financial Crisis," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 6024.
    2. Hilmar Þór Hilmarsson, 2013. "Small states and big banks – the case of Iceland," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 13(1), pages 31-48, July.
    3. Trung Quang DINH & Hilmar Þor HILMARSSON, 2012. "Private Sector Export to Emerging Market Economies During Times of Crisis: How Can Export Credit Agencies Help?," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 13(1), pages 167-180, March.
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    Cited by:

    1. Hilmar Tór HILMARSSON, 2016. "Iceland, economic integration and the European Union," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 17(4), pages 373-391, October.
    2. Hilmar Tór HILMARSSON, 2014. "Managing the Crisis in Iceland and the Dishonesty of the International Community?," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 15(5), pages 601-612, December.

    More about this item

    Keywords

    Small states; Latvia and Iceland; global crisis; economic policy; privatization.;

    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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