It can't happen, it's a bad idea, it won't last: U.S. economists on the EMU and the euro, 1989-2002

Research output: Contribution to journalArticle


On the whole, the euro has, thus far, gone much better than many U.S. economists had predicted. We survey how U.S. economists viewed European monetary unification from the publication of the Delors Report in 1989 to the introduction of euro notes and coins in January 2002. U.S. academic economists concentrated on whether a single currency was a good or bad thing, usually using the theory of optimum currency areas, and most were skeptical towards the single currency. In contrast, Federal Reserve economists had a less analytical and a more pragmatic approach. Both groups adjusted their views as European monetary unification progressed. It is surprising that academic economists, living in and benefiting from the U.S. monetary union, were so skeptical of monetary unification in Europe. We explain the skepticism as resulting from the strong influence of the original theory of optimum currency areas; failure to see monetary unification as an evolutionary process; failure to identify pegged exchange rates, rather than floating rates, as the practical alternative to a single European currency; and the belief that the single currency for Europe was primarily a political project that ignored economic fundamentals.


External organisations
  • Tom Phillips and Associates
  • European Commission
Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economics


  • Euro, optimum currency area, European Central Bank (ECB), Economic and Monetary Union (EMU), Federal Reserve System, monetary unification, Europe, United States, B22, E42, E5, F02, F33, F41
Original languageEnglish
Pages (from-to)4-52
Number of pages49
JournalEcon Journal Watch
Issue number1
Publication statusPublished - 2010
Publication categoryResearch
Externally publishedYes

Bibliographic note

Cited By :27 Export Date: 22 February 2017