What is the economic impact of joining a currency union? Is this impact heterogeneous across regions? And how does it change in case of a recession? We answer these questions by investigating the economic impact of joining the euro area for the latecomers, that is, the eastern European countries that adopted the euro after 2002. Differently from previous literature, we use NUTS-2 regions as units of analysis. This novelty allows us to investigate the theoretical predictions of a currency union impact at a more appropriate geographical level. Using a recently developed counterfactual approach, we estimate the overall as well as the disaggregated impact of joining the euro area. We find that the adoption of the euro brought about a small positive effect, which was, however, dampened by the Great Recession. Individual regional estimates suggest heterogeneous returns with benefits accruing mostly to core regions.

What kind of region reaps the benefits of a currency union? / Cerqua, Augusto; DI STEFANO, Roberta; Pellegrini, Guido. - In: JOURNAL OF REGIONAL SCIENCE. - ISSN 0022-4146. - (2022). [10.1111/jors.12631]

What kind of region reaps the benefits of a currency union?

Augusto Cerqua
;
Roberta Di Stefano;Guido Pellegrini
2022

Abstract

What is the economic impact of joining a currency union? Is this impact heterogeneous across regions? And how does it change in case of a recession? We answer these questions by investigating the economic impact of joining the euro area for the latecomers, that is, the eastern European countries that adopted the euro after 2002. Differently from previous literature, we use NUTS-2 regions as units of analysis. This novelty allows us to investigate the theoretical predictions of a currency union impact at a more appropriate geographical level. Using a recently developed counterfactual approach, we estimate the overall as well as the disaggregated impact of joining the euro area. We find that the adoption of the euro brought about a small positive effect, which was, however, dampened by the Great Recession. Individual regional estimates suggest heterogeneous returns with benefits accruing mostly to core regions.
2022
accession countries; counterfactual approach; euro area; regional data
01 Pubblicazione su rivista::01a Articolo in rivista
What kind of region reaps the benefits of a currency union? / Cerqua, Augusto; DI STEFANO, Roberta; Pellegrini, Guido. - In: JOURNAL OF REGIONAL SCIENCE. - ISSN 0022-4146. - (2022). [10.1111/jors.12631]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/1664309
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