IDEAS home Printed from https://ideas.repec.org/a/liu/liucej/v5y2008i2p269-290.html
   My bibliography  Save this article

Is economic convergence in New Member States sufficient for an adoption of the Euro?

Author

Listed:
  • Marie-José Rinaldi-Larribe

Abstract

The 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.

Suggested Citation

  • Marie-José Rinaldi-Larribe, 2008. "Is economic convergence in New Member States sufficient for an adoption of the Euro?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 5(2), pages 269-290, December.
  • Handle: RePEc:liu:liucej:v:5:y:2008:i:2:p:269-290
    as

    Download full text from publisher

    File URL: http://eaces.liuc.it/18242979200802/182429792008050205.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sorin Celea & Petre Brezeanu & Ana Petrina Păun, 2013. "Fiscal Discipline within the EU: Comparative Analysis," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 13(2), pages 23-30.
    2. Monica Răileanu Szeles, 2012. "What Lies beyond the Romania’s Economic Development," BRAND. Broad Research in Accounting, Negotiation, and Distribution, EduSoft Publishing, vol. 3(3), pages 54-63, December.
    3. 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.
    4. Monfort, Mercedes & Cuestas, Juan Carlos & Ordóñez, Javier, 2013. "Real convergence in Europe: A cluster analysis," Economic Modelling, Elsevier, vol. 33(C), pages 689-694.
    5. 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.

    More about this item

    Keywords

    New European Member States ; Euro ; Enlargement of EMU ; Maastricht criteria ; Central and Eastern European Countries ; CEECs ; Optimal Currency Area theory;

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:liu:liucej:v:5:y:2008:i:2:p:269-290. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Piero Cavaleri). General contact details of provider: http://edirc.repec.org/data/liuccit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.