CROATIAN MONETARY INTEGRATION IN THE EUROPEAN MONETARY UNION

Republika Hrvatska je pristupanjem Europskoj uniji u 2013.godini i potpisivanjem Ugovora o Europskoj uniji, preuzela i obvezu prihvaćanja eura kao svoje valute, odnosno obvezu pristupanja u europsku Ekonomsku i monetarnu uniju. Cilj ovoga rada bio je istražiti da li je Republika Hrvatska iskoristila dugo pred pristupno razdoblje ulaska u Europsku uniju, da bi provođenjem strukturnih reformi prilagodila svoje gospodarstvo i vanjsku trgovinu za trgovanje i kompetitivnu poziciju na zahtjevnim tržištima zemalja Europske unije i Ekonomske i monetarne unije, te bi time troškove prilagodbe Republike Hrvatske prilikom pristupanja monetarnoj uniji svela na najmanju moguću mjeru. Na dalje, cilj rada bio je i istražiti kakva je pozicija Republike Hrvatske u pogledu usklađenosti poslovnih ciklusa i korelacije kod šokova na strani ponude i potražnje u Republici Hrvatskoj i u zemljama EMU. Kakve prednosti i nedostatke Hrvatska može očekivati nakon pristupanja monetrnoj uniji? Istraživanja, korištenjem analize indeksa, zatim korelacije te strukturne vektorske autoregresije (SVAR model) su pokazala da Republika Hrvatska nije uskladila strukturu svojega gospodarstva i izvoza sa zemljama europske unije i Ekonomske i monetarne unije, te da ju očekuju značajni troškovi prilagodbe u razdoblju dok se priprema za preuzimanje eura kao vlastite valute, nadalje da nema sinkronizirane poslovne cikluse niti korelirane šokove ponude i potražnje sa područjem europske Ekonomske i monetarne unije, te ne udovoljava ni mastriškim nominalnim kriterijima konvergencije k euru. Međutim, prednosti koje će ostvariti kada jednom pristupi monetranoj uniji su veće od troškova kojima će biti izložena, stoga Republika Hrvatska treba čim prije donijeti program fiskalne konsolidacije, strukturnih reformi i program uvođenja eura, te kada jednom prihvati euro i pristupi monetarnoj uniji može očekivati rast gospodarstva i blagostanja gospodarskih subjekata i građana.The Republic of Croatia has achieved its two main strategic goals since 1991 when it was proclaimed an independent state, it became a full member of NATO alliance in 1999 and in 2013 a member of the European Union By joining the EU and signing the Contract of European Union, Croatia has taken the obligation to accept the euro as its currency, namely the obligation to join the european Economic and monetary union. The aim of this paper is to investigate whether the Republic of Croatia used the long pre-accession period to join the EU by implementing structural reforms in order to adjust its economy and export for trade and a competitive position on demanding markets of the European Union and the Economic and monetary union, which would lead to adjustment at the lowest cost possibile when joining the monetary union. Furthermore, the aim of the paper is to find out the position of the Republic of Croatia with regard to the alignment of business cycles and correlation of shocks both of supply and demand in the Republic of Croatia and the EMU.What are the advantages and disadvantages Croatia can expect after joining the monetary union? Studies and analyses of export structures of the Republic of Croatia, by using the benefit indicator in the balance of payment in the time span from 2002 to 2013, then the concentration index in 2014 as well as the intra-industrial exchange with the EU countries from 2007-2014, showed that the Republic of Croatia did not use the period from 2005 -2013 to align its economic structure and export with the EU and EMU markets through structural reforms. As a result, Croatia will have to face in the future the adjustment costs if it wishes to join the monetary union and to receive benefits after it accepts the euro as its currency. Croatian export to the developed countries of the monetary union does not represent a dominant trade of capital intensive goods, which are mainly traded at these markets, but the export is more concentrated and is inter-industrial type, which suggests that the Republic of Croatia has not made progress in the area of structural reforms in order to adjust its economy to the economy of the European Union and Economic and monetary union. The study of correlation of business cycles for the period 1999-2014 through the growth rate expressed in real gross domestic product and inflation rate, expressed through the harmonized index of consumer prices and GDP deflator, suggests a weak correlation between the Republic of Croatia and the area of european Economic and monetary union with regard to the growth of gross domestic product and inflation in the observed period. As the results suggest, there is a weak alignment of business cycles which only underlines the thesis about the weak synchronization between the economies of the Republic of Croatia and the area of the monetary union. By using the Structural vector autoregression (SVAR) model there was conducted a research of identifyng supply and demand schocks which hit countries of the Economic and monetary union and the EU countries, which were not members of the Economic and monetary union, among them the Republic of Croatia, in the time span from 1999 to 2014. The aim of the research was to analyze the correlation of supply and demand shocks which hit determined countries, the EMU and the Republic of Croatia. The results of the correlation analysis of supply and demand shocks for the Republic of Croatia with regard to the euro zone suggest a low level of correlation and the need for the Republic of Croatia prior to joining the EMU to harmonize its business cycles with the countries of the monetary union so as to, once it becoms a member of the European monetary union, bring the economy hit by supply and demand shocks into an equilibrium at the lowest possible costs. In the last chapter of this paper it has been carried out, on the basis of macroeconomic cost benefit analysis for the monetary union and the european Economic and monetary union, a study of advantages and disadvantages which await the Republic of Croatia once it joins the monetary union.It can be concluded that there are more advantages than disadvantages in already high euroization of the Republic of Croatia which needs, as soon as possible, to come up with the Programme of the euro introduction as its own currency, to start with economic structural reforms as well as to come up with the programme of fiscal cosolidation, namely to implement discipline in conducting public finances and fiscal policy with the aim of achieving Maastricht nominal criteria of convergence in order to, as a future member of the EMU, to achieve economic growth and wealth for its citizens and businesses