Perspectives on Euro introduction in the Romanian economy

Abstract

This paper offers a first quantitative glance at the possible effects of preparing for Euro adoption, as well as at the ex-post effects of actual adoption. Although the complexity of the models considered gradually increases, nevertheless all the simulations provide the same general picture in which (short and sometimes medium term) restrictiveness is revealed. The results show that for Romania, fulfilling the Maastricht criteria implies short-term economic slowdown and restrictiveness, followed by economic recovery and growth in the medium term and especially the long run. Quantitative estimates of these effects are provided. The most important negative evolutions are to be found for the labour market and investment.