Should Estonia Euroize?

22 Pages Posted: 5 May 2003

See all articles by Anne Sulling

Anne Sulling

Université Paris IX Dauphine

Abstract

Estonia has been operating a currency board arrangement tied to the deutschemark, now the euro, since 1992. Optimal currency area considerations, policy orientation and the flexibility of prices and wages in Estonia support a case for monetary union with the eurozone. But the European Union requires Estonia to wait until EU accession and subsequent Eurosystem accession before it can adopt the euro. In the meanwhile, gains expected from euroization - lower and more stable interest rates, lower transactions costs in trade and increased transparency, all of which would promote trade, investments and economic growth - would be forgone. In this context, the paper raises the question, should Estonia go ahead and euroize now?

JEL Classification: E42, E58, F33

Suggested Citation

Sulling, Anne, Should Estonia Euroize?. Economics of Transition, Vol. 10, No. 2, pp. 469-490, 2002. Available at SSRN: https://ssrn.com/abstract=317349

Anne Sulling (Contact Author)

Université Paris IX Dauphine ( email )

223 Rue Saint-Honore
Paris, 75775
France

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