Robert Mundell, 1932–2021: Ahead of His Time

Mundell pioneered the theory that serves as the basis for the design and implementation of economic policies in open economies. The launch of the euro was based on his work on "optimum currency areas”, and the late-twentieth century US economic boom was based on his theories about the optimum policy mix and the supply-side economics adopted by the Reagan administration. He always advocated fixed exchange rates and, by extension, the common European currency, believing that monetary independence is both unnecessary and undesirable. In a debate with Milton Friedman, he argued that exchange rate flexibility is no substitute for price flexibility: Even in the best circumstances, the adjustment process works by raising prices and undermining monetary stability.