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A winner of the Nobel Prize in economics says that a decade ago he feared the euro would face problems because there wasn’t enough fiscal coordination among countries to support it.
Christopher Sims, who shares this year’s $1.5 million award in economics with fellow American Thomas Sargent, said Wednesday that the European financial crisis was partly caused because the common European currency didn’t have “clear fiscal backing” when it was created.
Sims referred to his 2002 paper “The Precarious Fiscal Foundations of EMU (European Monetary Union),” in which he wrote about the risks of a euro crisis and the possibility of its spreading.
