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Too Much to Lose, or More to Gain? Should Sweden Join the Euro?

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  • J. James Reade
  • Ulrich Volz

Abstract

This paper considers the costs and benefits of Sweden joining the European Economic and Monetary Union (EMU).� We pay particular attention to the costs of abandoning the krona in terms of a loss of monetary policy independence.� For this purpose, we apply a cointegrated VAR framework to examine the degree of monetary independence that the Sveriges Riksbank enjoys.� Our results suggest that Sweden has in fact relatively little to lose from joining EMU, at least in terms of monetary independence.� We complement our analysis by looking into other criteria affecting the cost-benefit calculus of monetary integration, which, by and large, support our positive assessment of Swedish EMU membership.

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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 442.

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Date of creation: 01 Aug 2009
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Handle: RePEc:oxf:wpaper:442

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Keywords: Swedish EMU membership; Monetary policy independence; European monetary integration; Cointegrated VAR method;

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  7. Zeno Enders & Philip Jung & Gernot J. Müller, 2009. "Has the Euro changed the Business Cycle?," Bonn Econ Discussion Papers, University of Bonn, Germany bgse6_2009, University of Bonn, Germany.
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  9. Alexandra Ferreira-Lopes, 2008. "In or Out? The Welfare Costs of EMU Membership," Working Papers Series 1, ISCTE-IUL, Business Research Unit (BRU-IUL) ercwp1408, ISCTE-IUL, Business Research Unit (BRU-IUL).
  10. Anders Møller Christensen & Heino Bohn Nielsen, 2009. "Monetary Policy in the Greenspan Era: A Time Series Analysis of Rules vs. Discretion," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 69-89, 02.
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  13. M. Hashem Pesaran & L. Vanessa Smith & Ron P. Smith, 2007. "What if the UK or Sweden had joined the euro in 1999? An empirical evaluation using a Global VAR," International Journal of Finance & Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 12(1), pages 55-87.
  14. Nielsen, Bent & Rahbek, Anders, 2000. " Similarity Issues in Cointegration Analysis," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(1), pages 5-22, February.
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Cited by:
  1. Łukasz Goczek & Dagmara Mycielska, 2013. "Long-run interest rate convergence in Poland and the EMU," Working Papers 2013-21, Faculty of Economic Sciences, University of Warsaw.
  2. Herbert S. Buscher & Hubert Gabrisch, 2011. "What Might Central Banks Lose or Gain in Case of Euro Adoption – A GARCH-Analysis of Money Market Rates for Sweden, Denmark and the UK," IWH Discussion Papers, Halle Institute for Economic Research 9, Halle Institute for Economic Research.
  3. Gaetano D’Adamo, 2011. "Estimating Central Bank preferences in a small open economy: Sweden 1995-2009," Working Papers, Department of Applied Economics II, Universidad de Valencia 1111, Department of Applied Economics II, Universidad de Valencia.
  4. Łukasz Goczek & Dagmara Mycielska, 2013. "Ready for euro? Empirical study of the actual monetary policy independence in Poland," Working Papers 2013-13, Faculty of Economic Sciences, University of Warsaw.

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