Friday, October 30, 2009

So what! A Bumpy Ride

Two fellas travel down a bumpy road. One has tight suspension and the other has lose suspension. Both fellas manage to steer their cars well and both travel at 50 miles per hour. They both get to their destination at the same time.

Paul Krugman mistakes the speed of arrival with the smoothness of the ride. There is no need to veer off course to avoid a few bumps, if our goal is to get to the destination.

in reference to:

"The obvious interpretation is that once the exchange rate is freed, it bounces around a lot, while domestic prices in domestic currency are sticky, and don’t move much."
- Adjustment and the dollar - Paul Krugman Blog - (view on Google Sidewiki)

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