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The Accession Economies’ Rocky Road to the Euro


  • Eichengreen, Barry


Now that the decision has been taken to admit to the European Union eight of what were once called the transition economies, attention has naturally turned to whether these countries should also join Europe’s monetary union. But where is a consensus that joining the EU, while posing certain difficulties, will be a source of net benefits, there is no such consensus about the adoption of the euro. In part this uncertainty reflects the unusual difficulty that monetary economists have in translating theory into policy. We specialists, in other words, cannot even agree amongst ourselves. In this lecture I suggest that this uncertainty is unwarranted. Adopting the euro is clearly superior to the other monetary options available to the new EU members. These countries are right to be committed to joining Euroland as soon as possible. And the incumbent members of the euro area should be happy to have them. To be sure, enlarging the monetary union will pose difficulties for both the incumbents and the new members. But these are minor compared to the difficulties that will arise under other scenarios. From this point of view, it is regrettable that the incumbents appear to be placing unnecessary obstacles in the path of the aspirants.

Suggested Citation

  • Eichengreen, Barry, 2003. "The Accession Economies’ Rocky Road to the Euro," Institute of European Studies, Working Paper Series qt07h5c51w, Institute of European Studies, UC Berkeley.
  • Handle: RePEc:cdl:bineur:qt07h5c51w

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    References listed on IDEAS

    1. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1243-1284.
    2. Paul R. Krugman, 1991. "Target Zones and Exchange Rate Dynamics," The Quarterly Journal of Economics, Oxford University Press, vol. 106(3), pages 669-682.
    3. Mark Hallerberg & Lúcio Vinhas de Souza & William Roberts Clark, 2002. "Political Business Cycles in EU Accession Countries," European Union Politics, , vol. 3(2), pages 231-250, June.
    4. Luis Felipe Cespedes & Roberto Chang & Andres Velasco, 2002. "IS-LM-BP in the Pampas," NBER Working Papers 9337, National Bureau of Economic Research, Inc.
    5. Michael Reutter & Hans-Werner Sinn, 2000. "The Minimum Inflation Rate for Euroland," CESifo Working Paper Series 377, CESifo Group Munich.
    6. Barry J. Eichengreen & Inci Ötker & A. Javier Hamann & Esteban Jadresic & R. B. Johnston & Hugh Bredenkamp & Paul R Masson, 1998. "Exit Strategies; Policy Options for Countries Seeking Exchange Rate Flexibility," IMF Occasional Papers 168, International Monetary Fund.
    7. Gleich, Holger, 2003. "Budget institutions and fiscal performance in Central and Eastern European countries," Working Paper Series 215, European Central Bank.
    8. Inci Ötker & Rupa Duttagupta, 2003. "Exits From Pegged Regimes; An Empirical Analysis," IMF Working Papers 03/147, International Monetary Fund.
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