A New EU Member Country on the Road to the Euro Area: Monetary and Fiscal Policies for Slovenia

Weyerstrass, Klaus and Neck, Reinhard (2007) A New EU Member Country on the Road to the Euro Area: Monetary and Fiscal Policies for Slovenia. Atlantic Economic Journal, 35 (4), pp. 431-449.

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Abstract or Table of Contents

Slovenia was the first of the ten new EU member states to enter the Euro Area on January 1, 2007. It was an explicit objective of Slovenian policy-makers to introduce the euro as early as possible. Slovenia was participating in the exchange rate mechanism ERM-II since June 2004. This paper analyses whether the choice of participating in the ERM-II soon after EU accession was the best strategy in terms of the macroeconomic performance. It is shown that a better overall economic performance could have been achieved under a crawling peg regime allowing a depreciation of the Slovenian tolar (SIT) before introducing the euro in 2007. The worst policy results are obtained when the exchange rate is totally fixed at an early stage of EMU integration. The labor market performance can be significantly improved by cutting income taxes and social security contribution rates.

Item Type: Article in Academic Journal
Keywords: fiscal policy, monetary policy, macroeconometric model, Slovenia
Classification Codes (e.g. JEL): E40, E62
Status: Published
Date Deposited: 27 Aug 2015 14:02
Last Modified: 01 Apr 2016 14:20
URI: http://irihs.ihs.ac.at/id/eprint/3574

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