The business cycle implications of the euro adoption in Poland
This article analyses the macroeconomic impact of the loss of autonomous monetary policy after the euro adoption in Poland. Using a two-country Dynamic Stochastic General Equilibrium (DSGE) model with sticky prices and wages, we find that the euro adoption will have a noticeable impact
on the magnitude of economic fluctuations. In particular, the volatility of output, interest rate, consumption and employment is expected to increase while the volatility of inflation should decrease. Also, in order to quantify the effect of the euro adoption, we compute the welfare effect
of this monetary policy change. Our findings suggest that the welfare cost is not large.
Keywords: DSGE; E52; E58; EMU accession countries; F33; F41; euro; monetary policy
Document Type: Research Article
Affiliations: National Bank of Poland,Economic Institute, Swietokrzyska 11/2100-919 Warszawa, Poland
Publication date: 01 June 2013
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