The euro-dollar exchange rate defies prediction

The paper reviews the diverging views held across the Atlantic on the prospects of creating the euro before its creation and on the prospects of its success afterwards. The paper then goes on to show that the euro-dollar exchange rate generally defied prediction. The reason is to be found in the inability of the modeling exercise to consider all the fundamental forces at work and the fact that news and other unexpected events have been practically impossible to model precisely. (c) 2005 Society for Policy Modeling. Published by Elsevier Inc. All rights reserved.