Should Central European Countries Join the Euro? A Review and Update of Trade Estimates and Consideration of Endogenous OCA Criteria

Twelve countries have acceded to the European Union (EU) since 2004, including five transition economies in Central Europe, the three Baltic republics and two more in Eastern Europe (along with Cyprus and Malta). One of the transition economies, Slovenia, in 2007 joined the European Economic and Monetary Union (EMU), adopting the euro, as envisioned in the Maastricht Treaty, in 2007. Should the others follow suit? The advantages of belonging to such a currency area are fairly straightforward. They include notably the promotion of trade and growth. The disadvantages are a bit more complicated but include notably the loss of the ability to pursue an independent monetary policy. What would it take for the advantages to outweigh the disadvantages?