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Latvia

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Submitted By airmym
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Latvia: Navigating the Strait of Messina |

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Introduction

This report indicates the history of Latvia country and the transition period of independency and the shifting to market economy. The country growth was very fast until 2008. In December 2008, facing the possibility of financial collapse and a currency crisis, they asked for a rescue and they received a $10.5 billion package funded by the International Monetary Fund (IMF), World Bank, EU, and several countries in the region. After that, it talks about the possibility that could help Latvia to restore a sustainable growth. Which are either Devalue the national currency or maintain the peg and attempt an “internal devaluation”.

Executive Summary 1. To study economic adjustment under a fixed exchange rate system 1. Explore the meaning of a "sudden stop" in capital flows and causes of Latvia's economic boom and busts. 2. Assess the tradeoffs involved in internal and external devaluation in the Eurozone. 3. Consider historical, political, economic, and other factors that influenced Latvia's policy decisions and their outcomes. 4. Predict the long-term impact of Latvia's policy decisions during the crisis.

Contents Introduction 1 Executive Summary 2 Analysis 4

Analysis

1) Historical, political, economic, and other factors that influenced Latvia's policy decisions and their outcomes (Learning objective# 5) | 2) Problems and the crisis and its causes (Learning objective #1, #2) | 3) Possible Salutations (Learning objective #3) | 4) Suggestion of a solution and explanation of the solution in the short run and the long run (Learning objective #6) | 5) Recommendation |

Historical, political, economic, and other factors that influenced Latvia's policy decisions and their outcomes

PESTLE analysis
• Political and Economic

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