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What drives people’s expectations of euro adoption? – Evidence from the OeNB Euro Survey on selected CESEE countries

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Abstract

Recently, the monetary integration of some countries in Central, Eastern and Southeastern Europe (CESEE) has gained new momentum. Based on data from the OeNB Euro Survey from 2007 to 2019, we present evidence on individuals’ expectations regarding accession to the euro area and examine how the framework that governs euro area accession, the different monetary policy regimes and de facto euroization affect expectations. We find that expectations have become less optimistic over time and that individuals’ uncertainty in forming expectations has increased. Exposure to de facto euroization increases optimism in expectations regarding euro introduction and decreases uncertainty. Individuals who trust their national central bank and the EU expect accession to the euro area to take place sooner. Expectations of inflation or depreciation of the local currency are related to more pessimistic expectations regarding euro introduction. Monetary expectations (i.e. inflation and exchange rate expectations) play a stronger role for EU member states than for EU candidates and potential candidates; regarding trust in institutions the picture is reversed.

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  • Peter Backé & Elisabeth Beckmann, 2020. "What drives people’s expectations of euro adoption? – Evidence from the OeNB Euro Survey on selected CESEE countries," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue Q4/20, pages 57-79.
    • Handle: RePEc:onb:oenbfi:y:2020:i:q4/20:b:1
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    More about this item

    Keywords

    euro area accession; expectations; uncertainty; CESEE;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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