"The model retains the uncomfortable property that any increase in demand for home output ... leads to nominal and real appreciation... The uncomfortable fact remains that even in this model there is a short-run tendency for an expenditure increase to induce an appreciation... Expansionary fiscal policy will lead to an initial depreciation of the nominal and real exchange rate if ... is accommodated by an expansion in nominal money."

“The most likely scenario is that EMU will occur but will neither end Europe’s currency troubles nor solve its prosperity problems.”

“If there was ever a bad idea, EMU it is.”

“Once Italy is in, with an appreciated currency, the country will soon be back on the ropes, just as in 1992, when the currency came under attack.”

“The paper develops a simple macroeconomic framework for the study of exchange rate movements. The purpose is to develop a theory that is suggestive of the observed large fluctuations in exchange rates while at the same time establishing that such exchange rate movements are consistent with rational expectations formation. In developing a formal model we draw on the role of asset markets, capital mobility, and expectations that have been emphasized in recent literature.”

“The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.”

“The most serious criticism of EMU is that by abandoning exchange rate adjustments it transfers to the labor market the task of adjusting for competitiveness and relative prices... losses in output and employment will predominate.”