IDEAS home Printed from https://ideas.repec.org/a/taf/applec/45y2013i17p2443-2455.html
   My bibliography  Save this article

The business cycle implications of the euro adoption in Poland

Author

Listed:
  • Michał Gradzewicz
  • Krzysztof Makarski

Abstract

This article analyses the macroeconomic impact of the loss of autonomous monetary policy after the euro adoption in Poland. Using a two-country Dynamic Stochastic General Equilibrium (DSGE) model with sticky prices and wages, we find that the euro adoption will have a noticeable impact on the magnitude of economic fluctuations. In particular, the volatility of output, interest rate, consumption and employment is expected to increase while the volatility of inflation should decrease. Also, in order to quantify the effect of the euro adoption, we compute the welfare effect of this monetary policy change. Our findings suggest that the welfare cost is not large.

Suggested Citation

  • Michał Gradzewicz & Krzysztof Makarski, 2013. "The business cycle implications of the euro adoption in Poland," Applied Economics, Taylor & Francis Journals, vol. 45(17), pages 2443-2455, June.
  • Handle: RePEc:taf:applec:45:y:2013:i:17:p:2443-2455
    DOI: 10.1080/00036846.2012.667550
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2012.667550
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. McDaniel, Christine A. & Balistreri, Edward J., 2002. "A Discussion on Armington Trade Substitution Elasticities," Working Papers 15856, United States International Trade Commission, Office of Economics.
    2. Hamid Faruqee, 2004. "Measuring the Trade Effects of EMU," IMF Working Papers 04/154, International Monetary Fund.
    3. Marvin Goodfriend & Robert King, 1997. "The New Neoclassical Synthesis and the Role of Monetary Policy," NBER Chapters,in: NBER Macroeconomics Annual 1997, Volume 12, pages 231-296 National Bureau of Economic Research, Inc.
    4. David Altig & Lawrence Christiano & Martin Eichenbaum & Jesper Linde, 2011. "Firm-Specific Capital, Nominal Rigidities and the Business Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(2), pages 225-247, April.
    5. Jan HAGEMEJER & Tomasz DARAS, "undated". "The long run-effects of the Poland´s accession to the eurozone. Simulation using POLDYN - a dynamic computable general equilibrium model," EcoMod2009 21500037, EcoMod.
    6. Adolfson, Malin & Laseen, Stefan & Linde, Jesper & Villani, Mattias, 2007. "Bayesian estimation of an open economy DSGE model with incomplete pass-through," Journal of International Economics, Elsevier, vol. 72(2), pages 481-511, July.
    7. Alexandra Lopes, 2006. "The Costs of EMU for Transition Countries," Computing in Economics and Finance 2006 149, Society for Computational Economics.
    8. Gadi Barlevy, 2004. "The Cost of Business Cycles and the Benefits of Stabilization: A Survey," NBER Working Papers 10926, National Bureau of Economic Research, Inc.
    9. Grzegorz Grabek & Bohdan Klos & Grzegorz Koloch, 2011. "SOEPL 2009 – An Estimated Dynamic Stochastic General Equilibrium Model for Policy Analysis And Forecasting," NBP Working Papers 83, Narodowy Bank Polski, Economic Research Department.
    10. Przystupa, Jan & Wróbel, Ewa, 2009. "Asymmetry of the exchange rate pass-through: An exercise on the Polish data," MPRA Paper 17660, University Library of Munich, Germany.
    11. Ca' Zorzi, Michele & De Santis, Roberto A. & Zampolli, Fabrizio, 2005. "Welfare implications of joining a common currency," Working Paper Series 445, European Central Bank.
    12. David Altig & Lawrence Christiano & Martin Eichenbaum & Jesper Linde, 2011. "Firm-Specific Capital, Nominal Rigidities and the Business Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(2), pages 225-247, April.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Svitlana Maksymenko, 2015. "The Cost of Euro Adoption in Poland," Working Paper 5779, Department of Economics, University of Pittsburgh.
    2. Skibińska, Małgorzata, 2016. "What drives the labour wedge? A comparison between CEE countries and the Euro Area," Economic Modelling, Elsevier, vol. 56(C), pages 148-161.
    3. Lama, Ruy & Rabanal, Pau, 2014. "Deciding to enter a monetary union: The role of trade and financial linkages," European Economic Review, Elsevier, vol. 72(C), pages 138-165.
    4. Michal Brzoza-Brzezina & Marcin Kolasa & Mateusz Szetela, 2016. "Is Poland at risk of the zero lower bound?," Bank i Kredyt, Narodowy Bank Polski, vol. 47(3), pages 195-226.
    5. Brzoza-Brzezina, Michał & Makarski, Krzysztof & Wesołowski, Grzegorz, 2014. "Would it have paid to be in the eurozone?," Economic Modelling, Elsevier, vol. 41(C), pages 66-79.
    6. Torój, Andrzej, 2015. "Macroeconomic Imbalance Procedure in the EU: a Welfare Evaluation," MF Working Papers 22, Ministry of Finance in Poland.
    7. Torój, Andrzej, 2017. "Managing external macroeconomic imbalances in the EU: the welfare cost of scoreboard-based constraints," Economic Modelling, Elsevier, vol. 61(C), pages 293-311.

    More about this item

    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:taf:applec:45:y:2013:i:17:p:2443-2455. 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: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.