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Home Publications Blogs Beat the Press NYT Does He Said, She Said on the Czech Republic and the Euro

NYT Does He Said, She Said on the Czech Republic and the Euro

Friday, 01 March 2013 05:57

The NYT had a piece discussing views in the Czech Republic on joining the euro. It left the issue very much as a he said, she said, providing little information that could provide readers with a basis for assessing the merits of the policy. While the piece did report the Czech Republic's unemployment rate as 7.5 percent, indicating it has not escaped the effects of the euro crisis, it would have been a simple matter to compare the change in unemployment from the pre-crisis years.

In the Czech case, the rise was 3.1 percentage points from a 2008 unemployment rate of 4.4 percent. The rise in the euro zone as a whole was 4.1 percentage points to 11.7 percent. The rise in the unemployment rate in the peripheral countries like Spain and Greece, which may provide a more appropriate comparison, was in the double digits. This may suggest that the Czech Republic benefited substantially as a result of the fact that it was not tied to the euro and the European Central Bank.



Okay folks, here's the data. According to the IMF, the Czech Republic had a per capita GDP in 2007 of $25,300. In Greece it was $28,600 and Spain $30,200. By comparison, per capita GDP in Austria was $38,600 and in Germany it was $34,600. If you think the Czech economy is more like Austria and Germany's than Greece's and Spain's then you better go straighten out the folks who compile the data at the IMF.

Comments (8)Add Comment
written by a, March 01, 2013 7:00
Why on Earth would Spain or Greece provide a better comparison? The country most like the Czech Republic in the Eurozone is Austria. Austia's unemployment has barely budged.
Austria and the Czech Republic
written by Dean, March 01, 2013 7:36
Austria is one of the richest countries in the EU and has been for some time. The Czech republic is a former east block country that had a centrally planned economy until 1991. That's not quite the same story.
Exchange Rate & Austerity
written by Amit, March 01, 2013 9:37
It would have been interesting had the discussion of employment figures been enhanced with actual data on whether the Czech Koruna was allowed to devalue, and data on the level of austerity in the Czech Republic vis-a-vis Europe.
The Czechs are like who?
written by steven milgrom, March 01, 2013 4:17
The Cz economy is closely tied to Germany. The key mfg industries are autos and auto parts. The people are very cultured, educated and conservative,but also inflexible (the Czech way), and corrupt(if you're not stealing for your family, your stealing from your family). For many years, foreign firms could find low costs, stability, an educated work force, a gorgeous capital city and an enthusiastic welcome mat.
Low costs have faded, the welcome mat is now slippery, and most foreigners find it hard to live here due to the language ...All in all, nothing like Austria, Greece or Spain.
As far as joining the Euro, no one here is remotely interested. The CZ korun is depreciating against the euro, debt is still below 50% of GDP, the banks are solid and while the country has been in a recession for 4 quarters, they are muddling thru...There are no easy fixes in Europe.
written by a, March 01, 2013 5:28
I'd disagree with Dean and pick issue with Steven. The Czech Republic is nothing like Spain or Greece but it is very much like Austria. Austrian unemployment has barely budged since the onset of the crisis, and by that indication CZ would benefit by joining the euro.

Dean, how on Earth did you decide that CZ is most like Greece or Spain? I'm afraid you come across as another geographically challenged America when you make such a terrible comparison. Perhaps you should avoid commenting on Europe until you bone up?
written by watermelonpunch, March 01, 2013 10:23
@ a
You seem to be disagreeing & picking a lot of issues, but giving absolutely no reasons for your claims.

HOW is Czech Republic economically most like Austria?

Because right now I'm tending to bet on the economist, not the geography expert. LOL

At any rate, I think just that Greece & Spain and their relationships with the rest of those in the EU and watching those relationships unfold over the past 4 years is enough to make anyone not in the EU wary of getting on the Euro at this stage. Just my average citizen impression, of course.
The inflexible eurozone
written by Steven milgrom, March 02, 2013 4:19
Dean's comparison to eurozone countries relates to the economic benefits, particularly as regards unemployment. Spain and greece's inability to reduce their currency values has played a very important role in their swelling unemployment levels. In this respect, they provide a far better comparison than Austria per the NYT article.
Unemployment is not the only issue however. The Czechs see the wasteful mismanagement of the eu, the risks to their banks (all foreign-owned) despite exhorbitant profits and their limited power in controlling their own economic fate. To jump into the downward-swirling cesspool known as the eurozone would be pure insanity! The Cz attitude is will look at it in 3-5 years. The NYT has no clue.
written by watermelonpunch, March 02, 2013 2:52
@ Steven milgrom
To jump into the downward-swirling cesspool known as the eurozone would be pure insanity!

That's what I would've thought that most people's attitudes would be.
Better to struggle with the devil you know, than the devil that looks possibly much worse.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.