With emotions soaring after the Estonian president criticized Nobel Prize-winning economist Paul Krugman via Twitter, the Estonian Cabinet was quick to rally in support of the president, following the release of a statement in which the head of state defended his remarks.

"It was a sincere and offhand reaction in defense of Estonia's efforts in recent years,” President Toomas Hendrik Ilves was quoted as saying in a press release.

On Wednesday, Krugman published a New York Times blog post entitled "Estonian Rhapsody,” in which the Keynesian and Eurozone skeptic expressed doubt over Estonia's role as what he said was a poster child for austerity advocates. Ilves rebuked: "Let's write about something we know nothing about & be smug, overbearing & patronizing."

At a government press conference, Finance Minister Jürgen Ligi, praised internationally in some circles for being one of the key architects of Estonia's fiscal policies, gave the president his backing.

"This is a matter of principle and I strongly support the president. This person [Krugman] has become a hack writer and a champion of the [US] president's policies,” Ligi said, adding that Krugman received the Nobel prize because there is no such thing as a "Nobel Prize for journalism.”

“In reality, Krugman has to a great extent supported the system that created our poverty and which is now over - and which regulated and printed money according to their own interpretation of economic rules. In the US that is possible, but we cannot solve our porverty according to those recipes - by borrowing money and buying ourselves expensive things,” Ligi said.

Sitting in for the prime minister, Defense Minister Urmas Reinsalu said that Krugman's influence cannot be underestimated, but that the Estonian story is an unsolved puzzle for the economist.

"Above all, even his most voluminous writings assert that the public sector must grow, be indebted and foster state-sponsored jobs," Reinsalu said. "Estonia is a problem for Krugman because Estonia doesn't fit into his theoretical model."

Another person to take the president's side, a private banking strategist for SEB, called Krugman's blog post “absurdly superficial” and said it was time that someone bring the economist “back to earth.”



