Product Description
The successful introduction of the euro has resulted in a lively debate about the merits of early euroization of the new EU member states and the Western Balkans. Previous studies on the adoption of the euro in Central Eastern Europe assert that potential gains from adopting the euro for trade and growth are substantial. This claim for Central European countries is bolstered by generalized gravity equation studies estimating the effect of common currencies on trade. In addition, it has been argued that a loss of monetary policy independence could be a benefit for these countries as fixed exchange rate systems have been associated with either higher output growth or significantly lower inflation while exchange rate variability has been a source of concern for Central European economies. In the existing literature on the pros and cons of early or unilateral euroization in Eastern Europe, notable absentees include the Southeastern European states of Albania, Macedonia, and Serbia. This book is an attempt to fill this void and provides a detailed analysis of political and economic aspects of unilateral euroization in these countries. In this book, the author argues in favor of a more sophisticated and statistically robust form of the gravity model of international trade than the traditional ordinary least square model used in other studies. The dataset used in the study includes information for 150 countries, dependencies, and territories. First, potential effects of euroization on bilateral trade with the Eurozone and national incomes of Albania, Serbia, and Macedonia are estimated. Following that, the author analyzes the potential effects of euroization on intra-regional trade and economic integration in Western Balkans.
