Europe's Stagnation: Beyond the Numbers Game Paul Krugman's recent posts on European stagnation have sparked a lively debate, but his analysis misses the mark in understanding the complexities of economic growth and its relation to living standards.
While the numbers game is crucial, it's only part of the story. The Draghi report highlights the divergence between European countries like France and Germany and the United States.
However, Krugman's analysis relies on purchasing power parity (PPP) comparisons at current prices, which distort reality by failing to account for productivity gains in sectors where prices have fallen significantly.