What if the UK had joined the EMU?

In 2002, euro notes and coins began circulating in the European Community, and for the 10 years since, economists have asked if the monetary union was a good decision. One intensely debated question: What if the United Kingdom had adopted the euro?

Assistant Professor of Economics Sandeep Mazumder and Ryan M. Pahl, a 2011 Wake Forest graduate, offer an answer to this question in their article “What if the U.K. had joined the Euro in 1999?” The research was published online in the journal Open Economies Review in June and is forthcoming in print. The two began work on the paper when Pahl was a student.

Mazumder says he is most proud of the paper because the idea originated with his student. “Ryan was intrigued by ideas we discussed in international finance and wanted to explore the hypothetical question of what would have happened if the United Kingdom had decided to adopt the single European currency. The question is relevant because there was, and still is today, a lot of pressure on the U.K. to join.”

“I had the opportunity to do real-world analysis,” says Pahl, who at the time was an undergraduate economics major and political science and global trade and commerce minor. “I had the chance to research and test theories that I was studying across disciplines.”

Ryan Pahl ('11)

Pahl looked at unemployment and gross domestic product in the U.K. from 1999 through 2010 to determine whether the government made the right decision. He found that the U.K. was correct in saying no to the euro.

“The research showed, though there were certain years the U.K. would have been better off had they switched to the euro, staying with the pound was the right choice for the U.K.’s economy,” says Mazumder.

Sandeep Mazumder

With the addition of economic models and fine-tuning of ideas, Mazumder took the lead in helping Pahl polish the piece for academic publishing standards, and the two coauthored the final article.

Pahl, an associate in the global risk management analyst program working in retail banking risk with Bank of America, says collaborating with Mazumder on the paper helped him develop a number of skills he uses daily, including tenacity. The project, from start to finish, took a year and a half.

“I learned how to start a project from a simple idea and see it through to completion,” says Pahl. “With professor Mazumder, I got experience brainstorming ideas, collecting data, performing data analysis, being flexible, changing direction, and crafting and editing a document that would be read by professionals in the field. I learned how to take professional criticism of my work and use it to create the best possible output.”

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