How Latvia Came through the Financial Crisis

This is a fascinating story of a huge credit boom, the resulting bust and deep recession, and of an amazingly radical and brave fiscal consolidation coupled with structural reforms. The authors rightly stress that economic and political lessons of Latvian stabilization and reforms go well beyond Latvia. These lessons are especially relevant for the members of the eurozone, as Latvia successfully resisted nominal devaluation of its currency and the eurozone countries do not have this option.

Against all odds, the Baltic countries regained their national independence twenty years ago. They did so heroically and peacefully, and they acted in the same way during the financial crisis. With little doubt, future generations of Latvians will look to Valdis Dombrovskis as the hero that salvaged their nation from this serious threat, returning his country to economic growth in only two years. In this fascinating book, Dombrovskis and Anders Åslund tell us the incredible tale of Latvia's road to recovery.

The open and booming Baltic countries could do little to impede the flood of capital preceding the global financial crisis and they were hit hard, most of all Latvia. This timely and engaging book tells the story of how Latvia entered the crisis and how its government took the country out of this most severe crisis. Its essence is that good policy is possible, and that sensible voters reward such policies.