Robert Mundell, Columbia University economist criticizes overvalued euro which promotes unemployment and urges QE

Robert Mundell, a Nobel prize winning Canadian economist at Columbia University and a specialist on trade,exchange rates and currencies has wisely critiqued the European central bank for allowing an overvalued exchange rate on the euro which has harmed growth in Europe and reinforced high unemployment. During an interview with Bloomberg news he also said he favoured quantitative easing by the ECB. Mundell’s support for this position is important and welcome.


About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
This entry was posted in austerity, balance of payments, business cycles, classical economics, European debt crisis, European unemployment, free trade and globalization, full employment, quantitative easing, unemployment and tagged , , , . Bookmark the permalink.

4 Responses to Robert Mundell, Columbia University economist criticizes overvalued euro which promotes unemployment and urges QE

  1. Very happy to stumble upon your blog, Professor! So I waste no time and ask you a question: can Euro be devalued without countries having to get out of the EMU or introducing parallel currencies?

    • Only if the European central bank lowers interest rates, undertakes quantitative easing or indicates it is trying for a more accommodating monetary policy. In current circumstances because of the global shock that has followed the crash in 2008 countries outside of the eurozone are tempted to use the strategy of a competitive devaluation via interest rate policy to increase their share of trade . But the proper strategy is to focus on unemployment reduction through targeting lower interest rates and financing stimulus at low interest rates. Exchange rates will then adjust accordingly.

      • Thank you for your reply! So do you think that if the ECB further cuts the interest rate (today at 0.75%) by bringing it to zero, this would shake up the European economy? What kind of measures would, in practice, bring a to an accommodating monetary policy? In my last post (A Suicidal Europe) I argue that austerity is killing our economy and I put forward the argument in favor of a EU fiscal policy. What’s your position on that?

  2. Well I definitely agree that monetary policy alone cannot do the job and that austerity is the wrong policy for the current circumstances. It will only deepen the crisis and push up unemployment rates. Europe needs as low interest rates as possible and a large well targeted stimulus program directed at regions where excessive unemployment prevails.the two policies together mutually reinforcing can push europe out of its recession and lower unemployment rates.

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