The Blundered Strategy of Euro Adoption in the Czech Republic: A ”Pre-crisis“ Retrospective

• Authors: Vladislav Flek
• Languages of publication: EN

Abstracts

EN

The commitment to join the eurozone in 2009-2010 was rejected by Czech Republic in 2006 at a time when signs of the eurozone crisis were not yet apparent. Nor did the prospects of failure to fulfil any of the Maastricht Convergence Criteria have any realistic basis. Real or alleged difficulties in meeting the Maastricht Convergence Criteria and attaining economic alignment with the eurozone did not serve as a mobilization factor for economic policies. Instead, these issues were perceived to offer an objective reason against euro adoption within the declared timeframe. The official stance against the euro was partly based on serious analytical and short-term forecasting errors, if not on deliberate manipulations, including an overemphasised misalignment of the Czech economy with the eurozone.

Keywords

EN

Czech Republic; eurozone; Maastricht Convergence Criteria; nominal and real convergence; single European currency

• Publisher: Sciendo
• Journal: Review of Economic Perspectives
• Year: 2013
• Volume: 13
• Issue: 3
• Pages: 132-145

Dates

published

2013-09-01

online

2013-10-08

Contributors

author

Vladislav Flek

• Metropolitan University Prague, Department of International Trade, Czech Republic

References

• Analyses of the Czech Republic’s Current Economic Alignment with the Euro Area (2008). Czech National Bank. Retrieved July 6, 2012 from http://www.cnb.cz/-miranda2/export/sites/www.cnb.cz/en/monetary_policy/strategic_documents/download/analyses_of_alignment_2008.pdf.
• Assessment of the Fulfilment of Maastricht Convergence Criteria and the Degree ofEconomic Alignment of the Czech Republic with the Euro Area (2004-2008). Ministry of Finance of the Czech Republic and the Czech National Bank. Retrieved March 25, 2010, from http://www.zavedenieura.cz/cps/rde/xchg/euro/xsl/14.html.
• BORGERSEN, T. A., KING, R. M. (2011). Reallocation and restructuring: A generalization of the Balassa-Samuelson effect. Structural Change and EconomicDynamics, Vol. 22, No. 4, pp. 287- 298. DOI: 10.1016/j.strueco.2011.07.001. ISSN: 0954-349X.[Crossref]
• Convergence Programmes of the CR (2004-2008). Retrieved 16 June, 2011 from http://www.zavedenieura.cz/cps/rde/xchg/euro/xsl/dokumenty_vladni_material.html.
• DĚDEK, O. (2002). Česká ekonomika a euro (Czech economy and the euro). Politickáekonomie, Vol. L, No. 3, pp. 361-375.
• DYBCZAK, K., FLEK, V., HÁJKOVÁ, D., HURNÍK, J. (2006). Supply SidePerformance and Structure in the Czech Republic. CNB Working Paper No. 4.
• ECB (2008). Convergence Report. Frankfurt, European Central Bank.
• EGERT, B. (2002). Investigating the Balassa-Samuelson in the Transition: Do We Understand What We See? Economics of Transition, Vol. 10, No. 2, pp. 279-309. DOI: 10.1111/1468-0351.00112[Crossref]
• Eurofound (2007). Fourth European Working Conditions Survey. Dublin, European Foundation for the Improvement of Living and Working Conditions.
• European Commission (2008). Convergence Report 2008. European Economy 3/2008. Retrieved 16 June 2011, from http://ec.europa.eu/economy_finance/publications/-publication12574_en.pdf
• European Commission (2010). Excessive deficits - Cyprus, Denmark and Finland jointhe watchlist. Press release, Retrieved 16 June, 2011, from http://ec.europa.eu/news/-economy/100616_en.htm.
• Fiscal Outlook of the Czech Republic (2009): Ministry of Finance of the Czech Republic. Retrieved 16 June, 2011 from http://www.mfcr.cz/cps/rde/xbcr/mfcr/-FiskalniVyhled_2009Q1_komplet_doc.
• FLEK, V. (2010). Euro jako naše budoucí měna: teorie a realita (Euro as our future currency: Theory and reality). In: Lacina, Rozmahel et al. (2010, pp. 261-265).
• FLEK, V., ed. (2007): Anatomy of the Czech Labour Market: From Over-employmentto Under-employment in Ten Years? Prague, The Karolinum Press.
• FLEK, V., MARKOVÁ, L., PODPIERA, J. (2003). Sectoral Productivity and Real Exchange Rate Appreciation: Much Ado About Nothing? Czech Journal of Economicsand Finance, Vol. 53, Nos. 3-4, pp. 130-153.
• HÁJEK, M. (2008). Ekonomický růst v České republice a nových členských zemích Evropské unie (Economic growth in the Czech Republic and new EU member countries). Politická ekonomie, No. 4, pp. 435-448.
• HELÍSEK, M. et al. (2009). Euro v ČR z pohledu ekonomů (Euro in the CR from the economists‘ viewpoint). Plzeň, Aleš Čeněk Publishing.
• Institutional Support for the Adoption of the Euro in the Czech Republic (2005). Ministry of Finance of the Czech Republic. Retrieved 16 June, 2011 from http://www.zavedenieura.cz/cps/rde/xchg/euro/xsl/dokumenty_vladni_material.html.
• KOMÁREK, L., ČECH, Z., HORVÁTH, R. (2003). Optimum Currency Area Indices -How Close is the Czech Republic to the Eurozone? CNB Working Paper No. 10.
• LACINA, L., ROZMAHEL, P. et al. (2010). Euro: ano/ne? (Euro yes/no?) Prague, Alfa.
• LALINSKY, T. (2010). Zkušenosti Slovenska se zavedením eura (Slovakia’s experience with Euro adoption). In: Lacina, Rozmahel et al. (2010, pp. 217-265).
• LEIN, S. M., LEON-LEDESMA, M., NERLICH, C. (2008). How is real convergence driving nominal convergence in the new EU Member States? Journal of InternationalMoney and Finance, Vol. 27, No. 2, pp. 227-248. DOI: /10.1016/j.jimonfin.2007.12.004 [WoS]
• MIHAJLEK, D., KLAU, M. (2003). The Balassa-Samuelson Effect in Central Europe:A Disaggregated Analysis. BIS Working Paper No. 143.
• MIHAJLEK, D., KLAU, M. (2008). Catching-up and inflation in transition economies:the Balassa-Samuelson effect revisited. BIS Working Paper No. 270.
• MUNDELL, R. A. (1961). A Theory of Optimum Currency Areas. American EconomicReview, Vol. LI, No. 4, pp. 509-517.
• Ministry of Finance of the CR (2010): Macroeconomic prediction. Retrieved 16 June, 2011, from http://www.mfcr.cz/cps/rde/xchg/mfcr/xsl/makro_pre.html.
• Protocol from the Czech National Bank Board Meeting held on 30 June 2005 (In Czech). Retrieved 6 July, 2012, from http://www.cnb.cz/miranda2/export/sites/www.-cnb.cz/cs/menova_politika/br_zapisy_z_jednani/2005/2005_06_30/pt_06_SZ_30_06_05.pdf
• STARK, J. (2008). The adoption of the euro: principles, procedures and criteria. Iceland Chamber of Commerce, Reykjavik, 13. February. Retrieved 16 June, 2011, from http://www.ecb.int/press/key/date/2008/html/sp080213.en.html
• The Czech Republic’s Euro-area Accession Strategy (2003). Retrieved 16 June, 2011, from http://www.zavedenieura.cz/cps/rde/xchg/euro/xsl/dokumenty_vladni_material-.html
• The Czech Republic’s Updated Euro-area Accession Strategy (2007). Retrieved 16 June, 2011 from http://www.zavedenieura.cz/cps/rde/xchg/euro/xsl/dokumenty-_strategie_cr_uerozony_382.html
• WORLD BANK (2009). Doing Business Report. Retrieved 16 June, 2011, from http://www.doingbusiness.org/EconomyRankings/.

Identifiers

DOI

10.2478/revecp-2013-0005