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Is Croatia Ready For The Emu?: An Ex Ante Analysis Of Nominal And Real Convergence

Author

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  • Drazen Derado

    (University of Split)

  • Antonela Mlikota

    (MICRO projekt d.o.o.)

Abstract

The EU-enlargement and the advanced process of economic integration have brought attention to monetary integration and the conditions for its successful functioning. The main theoretical framework of the analysis – the OCA-theory – foresees three main requirements for that – mobility of production factors, fiscal solidarity and trade integration. Although not theoretically founded, the Maastricht criteria of price and exchange rate stability, balanced public finance and long-term interest rates should contribute to successful monetary integration in the EU which faces inter-regional differences in the level of development and the possibility of external shocks. The analysis of nominal convergence shows that Croatia approaches the reference values of the EU and achieves a high degree of macroeconomic stability. However, it lags behind the successful new EU-member states in respect of trade integration and production structure similarity which can be regarded as important indicators of the long-term advantages of monetary integration.

Suggested Citation

  • Drazen Derado & Antonela Mlikota, 2007. "Is Croatia Ready For The Emu?: An Ex Ante Analysis Of Nominal And Real Convergence," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 16(2), pages 113-146, december.
    • Handle: RePEc:avo:emipdu:v:16:y:2007:i:2:p:113-146
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    References listed on IDEAS

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    More about this item

    Keywords

    optimum currency area; exchange rate; trade integration; EMU; Croatia;
    All these keywords.

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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