“IT CAN’T HAPPEN, IT’S A BAD IDEA, IT WON’T LAST”. US ECONOMISTS AND THE EURO; A REAPPRAISAL
“IT CAN’T HAPPEN, IT’S A BAD IDEA, IT WON’T LAST”. US ECONOMISTS AND THE EURO; A REAPPRAISAL

Summary/Abstract: Soon before the euro started to circulate among European citizens, Rudiger Dornbusch (2001) wrote, about the new currency: “It can’t happen, it’s a bad idea, it won’t last”. Although not unanimously shared, this strongly pessimistic vision was behind most of the contributions that economists from the US gave to the debate on the euro since it was first publicly announced, with the publication of the Delors report in 1989. Krugman, Feldstein, Dornbusch, Bayoumi, Kenen, Eichengreen, McKinnon, Tobin and many others provided a vast literature on the (many) risks and (scarce) opportunities of the European single currency. The untimely defence of the euro by Jonung and Drea (2009) and Issing (2012) provided new material for critique to a structure of economic governance in the Eurozone manifestly unsuccessful.The aim of the paper is to illustrate the (critical) contributions that US economists gave to the debate on the EMU and the euro, attempting a new assessment of their role. Some of them may be seen as merely instrumental to hinder a project that might jeopardize the dollar hegemony in the international monetary system, and many of them rely too much on a static concept of Optimum Currency Area’s criteria (as Jonung and Drea suggested). But most, further critiques should have been (and should now be) considered more seriously, in an attempt to build a framework for the long-term sustainability and success of the euro.

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