In the news: Robert Mundell

June 13, 2003

Robert Mundell, professor of economics at Columbia University, is often credited with inventing the European single currency, although he sees himself as just "one of several godfathers".

For over 40 years he has been laying the intellectual groundwork for a single currency and in 1972 was a leading member of the EEC's study group on economic and monetary union. In 1999 he was awarded the Nobel prize in economic sciences for his analysis of monetary and fiscal policy under different exchange rates. Professor Mundell's enthusiasm for the euro has not waned and his contribution to the Treasury's assessment of it, published this week, was characteristically blunt.

Asked whether Milton Friedman's suggestion that the euro areas could break up within 15 years was plausible, he responded: "An asteroid could hit our planet and demolish any area, or a world war could break out. No currency area is war proof. Even the US monetary union broke up in 1861." The UK is, he says, already losing out by not adopting the euro. He told the Treasury:

"It has lost foreign direct investment to the euro area as a consequence of its fluctuating exchange rate. It has also lost political influence over other EU members in matters of economic policy."

Professor Mundell's long-term vision is for a global currency - the intor - a monetary union between the dollar, euro and yen areas. In the meantime, he has used his $975,000 (£590,000) Nobel prize money for a more down-to-earth project - to complete renovations to his second home, a 500-year-old villa near Siena in Tuscany.

Born in Canada in 1932, Professor Mundell received his BA from the University of British Columbia in 1953. He studied at the London School of Economics and received his PhD from the Massachusetts Institute of Technology in 1956. From 1966 to 1971 he was economics professor at the University of Chicago and editor of the Journal of Political Economy .

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