Cost and Benefits of Adopting Euro

Georgieva Svrtinov, Vesna and Gorgieva-Trajkovska, Olivera and Temjanovski, Riste (2014) Cost and Benefits of Adopting Euro. Applied Sciences and Business Economics Journal, 1 (3). pp. 57-64. ISSN 2312-9832


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Euro zone is the largest economic integration of a currency area that the world had seen since the unification of the United States into a monetary union under the dollar, over two centuries earlier. This paper investigates the circumstances under which it is beneficial to participate in a currency area. We examine some key comparisons that can be made between Europe and the United States, particularly as it relates to the United States as a model for Europe, and also examines some key steps that policymakers could take to move Europe closer to fulfilling the criteria for being an optimal currency area. The aim of the paper is to examine both, costs and benefits associated with forming of European monetary union. The ultimate conclusion is that the euro zone is not an optimal currency area, albeit significant advancements towards it were made past the introduction of the euro, in terms of inflation convergence, financial integration and intra-trade intensification. Yet, the criteria of labor mobility, wage flexibility, fiscal and political integration, are far from being satisfied. Keywords: Optimal Currency Area, Euro Zone, Financial Integration, Monetary Politics

Item Type: Article
Subjects: Social Sciences > Economics and business
Divisions: Faculty of Economics
Depositing User: Olivera Trajkovska
Date Deposited: 27 Oct 2014 10:54
Last Modified: 27 Oct 2014 10:54

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