Publications by Author: Constantine A. Papadopoulos

1998

The eventual establishment of Europe's new currency, the euro, as a potential rival international currency to the U.S. dollar recently has elicited interest among a small but growing number of experts in the United States. Whereas official U.S. pronouncements tend to be couched in generally supportive terms, the views and opinions of American scholars tend to reflect considerable scepticism.

This paper examines the principal arguments put forward by those whoquestion the suitability of the European economy for monetary union. It argues, in particular, that such criticism tends not only to overestimate the importance of country–specific shocks and the need for fiscal federalism, in the European context, but also to underestimate the degree to which monetary union is seen in Europe as a means for addressing the very structural rigidities which, according to U.S. experts, cast doubt on the prospects for EMU.

In attempting to interpret the reasons for the pessimism of U.S. experts, importance is attributed to the overall uncertainties attaching to the EMU project, as well as, and more importantly, to the ambiguous nature of its repercussions on the American economy itself, including the dollar's international role. Failure is obviously undesirable from a U.S. strategic and economic point of view, while success will produce both benefits—more U.S. trade and investment—and costs, viz. a relative shift—however small—of economic activity and power from the U.S. to Europe.

Papadopoulos, Constantine A. "EMU: The Rising Challenge to the DollarA European Perspective on American Scepticism about Monetary Union." Working Paper 98–09, Weatherhead Center for International Affairs, Harvard University, June 1998.


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