Today News Features Motoring Times Computimes Obituaries Health Nobel Laureate economics professor, Robert Mundell, in Dublin yesterday. By Jane Suiter Prof Mundell, who delivered a lecture in Trinity College last night on macroeconomic policy in the EMU and the Brussels-Dublin budgetary controversy, said the European Commission had reasons for its recommendation to censure Ireland which were nothing to do with inflation but more to do with discipline. The Commission did not want to create a precedent that the guidelines could be ignored. To say that tax rises could have an impact on inflation is simply wrong.
Fiscal policy is the only variable.
He also insisted that different European States did not need different interest rates any more than different US states did. If Ireland is growing at 10 per cent or even 6 per cent and France is growing at 2 per cent, it just means the demand for money will be higher in Ireland. The optimal result will be that if Ireland is expanding rapidly, the growth of money will be equal to the demand for money. This also implies that a global monetary union would work, Prof Mundell said. He pointed out that the three main currency areas of the dollar, euro and the yen were all areas of price stability.