Is economic convergence in New Member States sufficient for an adoption of the Euro?
AbstractThe New European Member States (NMS) are expected to adopt the euro as soon as they fulfil the Maastricht criteria, which means that their nominal convergence has been achieved; but the question is: should those new European members adopt the euro as soon as possible or should they join the euro zone later on, when the real convergence of their economies is well underway? In the mean time, what currency system should the new European members adopt before joining the euro zone? Besides, where exactly do these NMS stand in terms of nominal convergence? In terms of real convergence, is the Optimal Currency Area (OCA) theory relevant concerning the new European members? The OCA theory states that countries are more suited to belong to a monetary union when they meet certain criteria related to the real convergence of an economy: a high degree of external openness, mobility of factors of production, and diversification of production structures. According to this theory, if there is a clear convergence between business cycles of countries that are willing to join the monetary union and the business cycle within the currency area, then this tends to prove that these countries are ready to enter the currency area. In this paper, we shall see where NMS stand regarding the Maastricht criteria; then we will try to find out whether these NMS fulfil the criteria identified by the OCA theory, which are linked to the real convergence of an economy. Then, after having gone through a survey of the literature devoted to business cycles synchronisation, we will seek to determine if there is a clear correlation between those countries' business cycles and the European cycle, which would stand in favour of an early adoption of the euro in these countries.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Cattaneo University (LIUC) in its journal European Journal of Comparative Economics.
Volume (Year): 5 (2008)
Issue (Month): 2 (December)
Contact details of provider:
Postal: Corso Matteotti 22 - Castellanza (VA) 21053
Phone: +39 (0)331-572 1
Fax: +39 (0)331-572 320
Web page: http://eaces.liuc.it/default.asp
More information through EDIRC
New European Member States ; Euro ; Enlargement of EMU ; Maastricht criteria ; Central and Eastern European Countries ; CEECs ; Optimal Currency Area theory;
Find related papers by JEL classification:
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- F15 - International Economics - - Trade - - - Economic Integration
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Juan Carlos Cuestas & Mercedes Monfort & Javier Ordóñez, 2012.
"Real Convergence in Europe: A Cluster Analysis,"
2012023, The University of Sheffield, Department of Economics.
- Triandafil, Cristina Maria, 2011. "The Analysis Of The Convergence Criteria. Empirical Perspective In The Context Of The Sustainable Character Highlight," Working Papers of National Institute of Economic Research 111205, National Institute of Economic Research.
- TRIANDAFIL, Cristina Maria, 2013. "Sustainability of convergence in the context of macro-prudential policies in the European Union," Working Papers of National Institute of Economic Research 130618, National Institute of Economic Research.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Piero Cavaleri).
If references are entirely missing, you can add them using this form.