Not so fast?
According to a recent Bloomberg article, nine people saw the Eurozone crisis coming years before anyone else. Wow, only nine people saw it coming? That is remarkable, these folks must be truly prescient if only they foresaw the crisis.
Except that this claim is terribly wrong. There were many economists who saw the problems of a European monetary union before it formed. One prominent economist not on the Bloomberg list is Martin Feldstein….
Feldstein was one among many American economists who doubted a currency union in Europe would work. In fact, an entire article in Econ Journal Watch provides a survey of the skeptical tendencies of most American economists over the Euro prior to its inception….Macro and Other Market Musings
Who Predicted the Eurozone Crisis?
David Beckworth | Associate Professor of Economics at Western Kentucky University in Bowling Green, Kentucky.
8 comments:
Here's Feldstein on the euro, writing in the Economist in 1992:
http://www.nber.org/feldstein/economistmf.pdf
And here is an analytic survey of the opinions of US economists about the euro throughout the 1989-2002 period. Skepticism about the euro was widespread.
http://ec.europa.eu/economy_finance/publications/publication16345_en.pdf
Was not Steve Keen also sceptical about the euro?
Bill Mitchell's book covered the history of the thought around the euro. He noted there was a divide between the American and European mainstream, with the Americans generally being skeptical (which matches the survey Dan mentions, but I have not looked at that survey).
The article was click bait, possibly planted by an undercover MMT operative at Bloomberg. But at the same time, pretty well all mainstream economists underrated the importance of fiscal policy in the 1990s.
I think there is a difference between being skeptical of the success of a big plan and laying out very specifically why a plan would fail. Most of the MMT guys cited in the Bloomberg article were very specific and were quite accurate as to how the project would fail.
That’s the first time I’ve seen Martin Feldstein say something interesting. I.e. I rather agree with Bill Mitchell who said “Martin Feldstein should be ignored”. See:
http://bilbo.economicoutlook.net/blog/?p=14356
Re economists who thought the Euro was a daft idea, plenty of German ones did. See this article by Richard Werner, in particular the passage starting, “When visitint Europe…”.
https://professorwerner.wordpress.com/2015/07/10/hallo-welt/
I did not see what Eichengreen wrote specifically, but as he wrote a book blaming the Great Depression on the Gold Standard, I would guess that got the fixed exchange rate analysis right. He is probably the most notable missing economist.
But people pointing out that the euro area is not an optimal currency area is not a big deal. You could say the same thing about Canada.
The article was click bait, possibly planted by an undercover MMT operative at Bloomberg.
Yep, and also designed to help move the MMT fan club into the Friedman and Thatcher camp by convincing them those are their true compadres.
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