Citation

Discussion Paper Details

Please find the details for DP2119 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: An Optimal Currency Area Perspective of the EU Enlargement to the CEECs

Author(s): Laurence Boone and Mathilde Maurel

Publication Date: March 1999

Keyword(s): eastern enlargement, Economics of Transition and Optimal Currency Area

Programme Area(s): Transition Economics

Abstract: This paper tries to assess whether it would be optimal for the CEECs to form a monetary union with either Germany or the EU. This cannot be done without discussing first the Maastricht criteria, which are the condition « sine qua non » for a country to be eligible. Yet, they are often independent from more structural criteria (Bayoumi and Eichengreen (1996b)). Hence, this paper argues that although the CEECs do not satisfy -yet- the Maastricht criteria, their economic cycle is close enough to that of the EU and Germany for a monetary union to bring them great benefits. Indeed, using a methodology derived by L. Reichlin and M. Forni (1997) and C. Fuss (1997), it can be shown that (i) the percentage of CEECs business cycle fluctuations explained by a German shock is very high,; (ii) furthermore, the impulse responses are positively correlated. These suggest that the CEECs would not suffer from a common monetary policy .

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2119

Bibliographic Reference

Boone, L and Maurel, M. 1999. 'An Optimal Currency Area Perspective of the EU Enlargement to the CEECs'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2119