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EMU enlargement towards CEEC’s : risks of sector-based and geographic asymmetric shocks


  • Jérôme Trotignon

    () (GATE CNRS Université Lyon 2)


The future membership of CEECs in the eurozone involves the risk of external asymmetric shocks, due to too strong a dependence on one sector or one customer country. By defining two indicators - sector-based and geographic - of exposure to shocks, taking into account the symmetry of the export structures of a candidate state with the EMU and the opening rate of the candidate state, we are able to draw up a classification of countries according to the fulfillment of Kenen’s criterion, revised and transposed to the geographic variety of exports. The results, compared with those of the two countries of the EMU which are most sensitive to sector-based and geographic shocks (Finland and Ireland), testify to a generally pronounced exposure to shocks. An inventory of the pairs country / branch and country / destination at the origin of shocks with strong macroeconomic impact shows that Bulgaria and Slovakia, and even more Estonia and Latvia, are exposed to major risks. Thus, these two small economies would be well advised to create a cyclical stabilization fund before envisaging joining the EMU. Against the thesis of the endogeneity of the OCAs (optimum currency areas), this recommendation remains valid, insofar as the increase in the share of intra-industry trade between the EMU and a candidate state does not necessarily entail a convergence of multilateral sector-based export structures.

Suggested Citation

  • Jérôme Trotignon, 2003. "EMU enlargement towards CEEC’s : risks of sector-based and geographic asymmetric shocks," Working Papers 0309, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
  • Handle: RePEc:gat:wpaper:0309

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    References listed on IDEAS

    1. Frankel, Jeffrey A & Rose, Andrew K, 1998. "The Endogeneity of the Optimum Currency Area Criteria," Economic Journal, Royal Economic Society, vol. 108(449), pages 1009-1025, July.
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    7. Eichengreen, Barry, 1993. "International Monetary Arrangements for the 21st Century," Center for International and Development Economics Research (CIDER) Working Papers 233202, University of California-Berkeley, Department of Economics.
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    More about this item


    Central and Eastern European countries; external asymmetric shock; Kenen's criterion; optimum currency area; symmetry of export structures;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration


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