Explain dynamics implied by the so-called walters critique

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Ireland and Spain are now in deep economic crises after preceding booms with fast credit growth, house price bubbles and real appreciations.
a) Why could not these countries pursue economic policies preventing the earlier booms? Explain the dynamics implied by the so-called Walters critique!
b) Ireland and Spain need to accomplish real depreciations. How can this be done within a monetary union? Is it likely to succeed?

Reference no: EM13239575

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