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Posner's argument about the disadvantage diversifying risk for a small country when facing a shock does not makes sense (paragraph 5). Let's say that the souteast region of U.S. face an adverse shock in its manufacturing industry (i.e., the world don't want to buy more carpets from Georgia). It is true that the overall statistics of national production might not be affected for a shock in a small industry. However, the effect in the south region, and specially in Georgia, will be the same whether or not this region consider themself an independent country or a region that belongs to the US. The fact that national output might not be affected is only an statistical fact, and it will be the same as if we compere the effect of an adverse shock on output in a small eastern european country with the effect of the name shock on the whole european output.
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Dec 5, 2012