Monetary union’s impact on economy of euro zone countries

This paper analyzes monetary union impact on economy of random country that joins in common currency area. As euro zone is only one good known monetary union in the world this research would build on this background. The purpose of this paper is to analyze the impact of monetary union on country economy and to find out, what impact on country economy benefits has characteristics of that country economy. First part of this paper analyzes theoretically literature on monetary union as itself and identifies theoretical monetary union impact on country’s economy. It’s clear that impact can be mixed. On one hand country could reach better economic growth results, financial stability, elimination of transaction costs and other benefits from global currency. On other hand country lost monetary policy independence and always exist desynchronization between all union countries priorities and needs. On the bases of literature analysis empirical research methodology is formulated, which is used to identify characteristics of economy and economic benefits after joining monetary union and most important to identify link between them. Relation between characteristics of economy and economic benefits after joining monetary union is analyzed by using graphic and ranking methods. Finally, in the third section of this paper link between characteristics of economy’s and economic’ benefits are analyzed. Results of this research show that countries, which are more synchronized and have more common economic structure to euro zone, benefits of monetary union are higher, while openness of economics have mixed impact. If economy openness is defined just like import value, then impact of joining monetary union is positive. This paper also discloses that economic benefits are higher if country joins monetary union on upper phase of business cycle. [...]Ekonomikos ir vadybos fakultetasVytauto Didžiojo universiteta