Would it have paid to be in the eurozone?

• Autorzy: Michał Brzoza-Brzezina , Krzysztof Makarski , Grzegorz Wesołowski
• Języki publikacji: EN

Abstrakty

EN

Giving up an independent monetary policy and a flexible exchange rate are the key sources of costs and benefits entailed to joining a monetary union. In this paper we analyze their ex post impact on the stability of the Polish economy during the recent financial crisis. To this end we construct a small open economy DSGE model and estimate it for Poland and the euro area. Then we run a counterfactual simulation, assuming Poland's euro area accession in 1q2007. The results are striking - volatilities of GDP and inflation increase substantially. In particular, had Poland adopted the euro, GDP growth would have oscillated between -6% and +9% (-9% to +11% under more extreme assumptions) instead of between 1% and 7%. We conclude that during the analyzed period independent monetary policy and, in particular, the flexible exchange rate played an important stabilizing role for the Polish economy. (original abstract)

Słowa kluczowe

EN

Optimum Currency Areas (OCA); Eurozone; Emerging markets; Small open economy

PL

Optymalny obszar walutowy; Strefa euro; Rynki wschodzące; Mała gospodarka otwarta

• Czasopismo: Department of Applied Econometrics Working Papers
• Rocznik: 2013
• Numer: nr 4
• Strony: 24

Twórcy

autor

Michał Brzoza-Brzezina

• National Bank of Poland; Warsaw School of Economics

autor

Krzysztof Makarski

• National Bank of Poland; Warsaw School of Economics

autor

Grzegorz Wesołowski

• National Bank of Poland; Warsaw School of Economics

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