Paul Krugman Tells Serbia to Spend More

The Nobel prize winning economist, Paul Krugman told the Serbian officials and business people to stimulate public spending and improve competitiveness on the market.

According to him, Serbia’s debt is not too high at the moment and the value of the Serbian national currency, dinar, makes the country competitive abroad. Krugman considers that dinar is still overrated despite its devaluation in recent time.

“The aggravating circumstance for improving competitiveness is the fact that almost entire foreign debt of the country is nominated in euros“, Krugman said.

He said that he himself is spending less than he did before the crisis, and that he is much more cautious.

“I am worried that bad things might happen, so as an individual, I cannot accept the idea that my spending helps the economy, and that is not fair or reasonable. But, the governments have to take that into account“, Krugman said, although he is well-known for his stance against austerity measures in times of recession.

Krugman assessed that the Serbian government could try to mitigate the effect of the international economic crisis but that Serbia is a small country which could not hope for a full recovery until Europe recovers.

Paul Krugman is an American economist, Professor of Economics and International Affairs at theWoodrow Wilson School of Public and International Affairs at Princeton University, who won the Nobel Prize in Economic Sciences in 2008.

He is well-know supporter of Neo-Keynesian economic theory, by which the easiest way to over come crisis periods is to stimulate government spending.

Paul Krugman came to Serbia at the invitation of the National Council for Economic Recovery, Serbian Economic Club „Privrednik“, as well as companies "Interkomerc", PSP Farman, "Beohemija", „Delta Holding“ and "MK group".