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Poland's Accession to the EMU


  • Artur Radziwill


This paper is focused on the development of a proper macroeconomic strategy in the process of Poland's accession to the European Monetary Union. It is argued that due to legal and political considerations Poland may not opt out from EMU participation. The country will however command net gains from participation in the eurozone, mainly due to reduced macroeconomic and microeconomic uncertainty. In order to achieve even higher gains it is necessary to reduce price and wage rigidities, eliminate constraints on free movement of labor, further promote trade links with EU and its diversification. Loss of monetary and exchange rate instruments will require responsive but generally conservative fiscal policy. Particularly, as Poland might experience major economic upturn at the outset in the EU membership, the country should achieve positive budget balance by this time. It will allow for fiscal expansion in case of future negative asymmetric shock or recessions. Fiscal policy should be therefore assigned to improve saving-investment balance and consequently current account, so that direct inflation targeting is well placed to achieve fulfillment of Maastricht price stability criterion. Real exchange rate is not an independent instrument to target current account, as real appreciation of domestic currency is unavoidable due to rapid productivity gains in Poland. Finally, the accession to EMU should follow promptly the accession to EU. Unilateral introduction of Euro is too risky for banking and real sectors. Slower process of joining EMU would hamper credibility of macroeconomic adjustment commitment.

Suggested Citation

  • Artur Radziwill, 2000. "Poland's Accession to the EMU," CASE Network Studies and Analyses 0212, CASE-Center for Social and Economic Research.
  • Handle: RePEc:sec:cnstan:0212

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    References listed on IDEAS

    1. Eichengreen, Barry & Rose, Andrew K & Wyplosz, Charles, 1996. "Contagious Currency Crises," CEPR Discussion Papers 1453, C.E.P.R. Discussion Papers.
    2. Pablo Emilio Guidotti & Guillermo Calvo, 1991. "Speculative Attacks," IMF Working Papers 91/10, International Monetary Fund.
    3. Calomiris, Charles W & Hubbard, R Glenn, 1990. "Firm Heterogeneity, Internal Finance, and 'Credit Rationing.'," Economic Journal, Royal Economic Society, vol. 100(399), pages 90-104, March.
    4. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 14-23.
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    Poland; EMU;


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