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Adopting the euro does not work without political integration

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  • Guillermo Peña

    (Universidad de Zaragoza)

Abstract

A new empirical exercise for dealing the effects of monetary unions on welfare is developed. The estimates of the effects of adopting the euro using a sample of 216 countries for the 1960–2021 period apply a novel multiple-period differences-in-differences approach. They show a significant and robust negative effect on economic growth of adopting the euro, mainly for the countries with the highest income inequality.

Suggested Citation

  • Guillermo Peña, 2025. "Adopting the euro does not work without political integration," International Economics and Economic Policy, Springer, vol. 22(2), pages 1-21, May.
    • Handle: RePEc:kap:iecepo:v:22:y:2025:i:2:d:10.1007_s10368-025-00657-9
    DOI: 10.1007/s10368-025-00657-9
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    Keywords

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    JEL classification:

    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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