on a particular political programme. the example - or should i say controversy - i have selected to illustrate the task of economists in government is the introduction of the euro, which took place on january 1, 1999. from the perspective of an economist, the launch of a common currency promises benefits and causes costs. since the benefits are mainly the result of structural improvements and the costs are due largely to the greater difficulty in steering inflation and economic activity, it is difficult to offset the advantages of a monetary union against its disadvantages. whether a monetary union, on balance, creates benefits or causes costs depends on a whole range of factors. robert a. mundell can be summarised as follows : in order to form a so - called optimal currency area, the member countries must be structured along similar lines and exhibit a high degree of flexibility. the benefits of a monetary union consist in a reduction of transaction costs for changing money, the elimination of internal exchange rate uncertainty, tighter competition thanks to easier price comparisons, the expansion of trade within the common currency area, the prevention of competitive depreciation and speculative attacks on a currency, and growth in the liquidity of the financial markets. the most significant costs of a currency union arise from the loss of the individual countries ’ independent monetary policies. the loss of monetary policy autonomy is particularly felt when the size or number of asymmetric shocks is large. such disruptions affect the economic structure, business activity and inflation of member countries in different ways. thus, they cannot be combated with a uniform economic policy. a controversy that has not yet completely died down is this : was the reunification of the two germanys after 1989 a shock that significantly impaired the prospects for a successful integration of germany into the european monetary union? related to this is today ’ s debate on the economic soundness of the stability and growth pact. is it right to adhere strictly to the maastricht treaty ’ s stability requirement even if in germany business conditions diverge strongly from the euro - zone average? the jury is still out. but in the eyes of most economists when asymmetric shocks abound, a uniform monetary policy and similarly restricted fiscal policies are not recommendable. in a longer - term perspective, the costs of the loss of monetary and fiscal policy independence will be progressively lower as the pace of economic adjustment accelerates over time. the speed with which the economy recovers depends largely on the flexibility of the labour market and on job mobility. when salaries develop in line

. there were product divisions, there were so - called “ regions ” responsible for large segments of the globe like europe, north america, latin america and asia, there were central functions like human resources, legal services, research and development and there were central staff units like corporate planning, politics and economics. numerous important persons assuming significant responsibilities rushed from meeting to meeting and from business lunch to business lunch, mostly with clients and corporate visitors from abroad and sometimes just with local colleagues. the food and the wines served at the visitors ’ restaurant easily matched what was on offer in the best restaurants in town. clearly the junior economist felt great from the very first day. he sensed that he was expected to contribute to the development of this grand corporation, that he was finally in a position to apply what he had learnt at university and that his superiors, the more senior or even very senior economists in his unit, were waiting for him to deliver. it was all the more sobering for the young economist to find that during many months his main task consisted in reading the economic section of newspapers in order to compose summaries that went as newsletters to other organisational units which had the same newspapers on their desks. later on, after having been observed attentively by superiors, more serious tasks were given to the young economist. the corporate planning unit requested economic data serving as exogenous variables in their divisional or regional planning exercises. the young economist was enthusiastic. he thought that now the moment had come to apply his macroeconomic and econometric forecasting skills. but again he was disappointed. senior colleagues explained that forecasting had long been outsourced to independent forecasting institutes. what was required from the junior was simply to take these outside forecasts and fit them into the tables according to the requirements of the planners. he then found out why his professional skills were not in demand. the reason was not the greater efficiency and quality of outsourcing. the reason simply was that outsourcing made it easier for the company ’ s economics unit to avoid responsibility. the planning of corporate production was a heavy responsibility indeed. the exogenous economic variables affected the outcome of the planning process decisively. erroneous economic data were likely to produce disaster, and for disaster nobody in the central staff of economics was prepared to accept the blame. therefore, economic forecasting was outsourced. if disaster did strike, the external provider of the data would be blamed. he would lose his contract and a different