Inflation will always be higher in Iceland, because they have a very specific pro union setup which guarantees salary increases each year. As a result of the unions, Icelanders work very few hours and earn some of the highest wages in the world - https://en.wikipedia.org/wiki/Icelandic_Confederation_of_Lab... It won't (I hope) be following Italy as an economic model.
By "popularized" I mean brought to a modern audience in Krugman's New York Times column. It's Mundell's theory of course.
Interest rates are the main way to fight inflation. Glad we agree that the Euro is a silly currency union!
> Inflation will always be higher in Iceland, because
They cannot join Euro until inflation stops being higher, because that's simply how it works: countries must achieve “convergence criterias” before they can enter the single currency.
By "popularized" I mean brought to a modern audience in Krugman's New York Times column. It's Mundell's theory of course.
Interest rates are the main way to fight inflation. Glad we agree that the Euro is a silly currency union!