Race to the Eurozone: Why Latvia Joined Before Lithuania

Markevičiūtė, Anastazija; Kuokštis, Vytautas

doi:10.15388/bjps.2016.5.10333

Cited by 23 publications

(3 citation statements)

References 13 publications

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“…One of the drivers of the euro adoption in these countries was the intensity of geopolitical threats due to Russia's foreign policy. This argument was reflected in the public statements made by their policy makers [Vilpišauskas, 2014;Markevičiūtė and Kuokštis, 2016;Feldmann and Kuokštis, 2021] and reinforced by Russia's actions in Ukraine in 2014. As noted by Feldmann and Kuokštis [2021], in the Baltic states, the euro was seen as a mean to reduce the Russian threat by promoting deep integration with Western Europe, even though belonging to the common currency area was not associated with any explicit security guarantees such as those provided by NATO membership.…”

Section: Discussionmentioning

confidence: 99%

The Russian invasion of Ukraine and the exchange rate of the Polish zloty: A fallacy of monetary autonomy?

Borowski,

Jaworski

2024

International Journal of Management and Economics

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We use the Twitter application programming interface to construct a novel indicator capturing the varying perceptions of geopolitical risk related to the war in Ukraine. We show that the Twitter variable is a statistically significant determinant of the EUR/PLN exchange rate following the invasion. We estimate that the war in Ukraine was responsible for an increase in the EUR/PLN exchange rate of about 5.0% in the first 2 weeks following its breakout and that the weakening of PLN contributed to an increase of headline inflation in Poland by about 0.33 percentage points. Our findings suggest that monetary policy autonomy can be substantially constrained due to conflicts in nearby countries. Therefore, they provide an argument for Poland in seeking Eurozone membership as a way to contain the impact of geopolitical factors on exchange rate volatility, which is likely to remain at play in the longer run.

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Section: Discussionmentioning

confidence: 99%

The Russian invasion of Ukraine and the exchange rate of the Polish zloty: A fallacy of monetary autonomy?

Borowski,

Jaworski

2024

International Journal of Management and Economics

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“…While other major macroeconomic news was occurring around the same time (in particular the Greek elections on January 25 and the initiation of the ECB's version of quantitative easing), they were also related directly to the expansion of the euro area; such increased volatility was thus perhaps signaling that markets were not so sanguine about adding another, poorer country to the mix at a time of already-heightened uncertainty. 1 Additionally, the time to joining the euro from the announcement of joining in Lithuania's case was one of the shortest on record (July 23, 2014, to January 1, 2015)perhaps a consequence of the earlier failed attempt to join the euro in 2007 (Markevičiūtė & Kuokštis, 2016) meaning that euro area markets may not have had time to process the information (Eurobarometer, 2015). Given Lithuania's long history of attempting to joining the euro-area and failing, it is likely that Lithuania finally fulfilling its accession criteria also may have been somewhat of a surprise (Backé & Dvorsky, 2018).…”

Section: H2mentioning

confidence: 99%

The more the Merrier? The reaction of euro area stock markets to new members

Grigaliūnienė¹,

Celov

Hartwell

2020

Journal of International Financial Markets, Institutions and Mo

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The adoption of the euro is a crucial turning point for the economy of any EU member and the culmination of a long process of exchange rate management and macroeconomic convergence. But how does the prospect of euro area enlargement play out in the countries that have already adopted the euro? Are new members seen as a way to expand the club of like-minded countries, or are they perceived as a threat to stability, either because there exists a moral hazard risk from the side of old members to adopt riskier behavior on behalf of new members or vice versa? This paper looks at the effects of the news of the euro's adoption event in new members on the stock returns of nineteen euro area countries, employing both an event study methodology and APARCH modeling to capture and test the form of responses of European financial market volatility. Our results show that markets were indeed pleased when new members joined the euro area, with negative responses due solely to local conditions rather than euro area-wide travails. In our most interesting finding, the expansion of the euro actually helped to dampen local market volatility in the post-crisis period in the founding member states, while euro adoption quelled volatility both pre-and post-crisis for non-founding members.

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“…In April 2012, the populations of Latvia and Lithuania were nearly evenly divided between those who were ‘very much’ or ‘rather in favour’ and those who were ‘very much’ or ‘rather against’ euro adoption, while elites favoured the euro nearly unanimously. Asked about the timeframe of euro adoption, only fourteen per cent of Lithuanians and nine per cent of Latvians wanted to adopt the euro ‘as soon as possible’ (Markevičiūtė and Kuokštis : 15). These figures are not surprising, because indigenous Baltic populations accepted hardships of internal devaluation not to accelerate the adoption of euro but to save their national currencies from degradation to the likes of rouble.…”

Section: The Paradoxical Demise Of Baltic Monetary Nationalism and Itmentioning

confidence: 99%

The glory and demise of monetary nationalism in the post‐communist Baltic states

Norkus

2018

Nations and Nationalism

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This paper contributes to the body of research on the monetary variety of nationalism, which conceives of national currency as an essential element of nation state and national identity (‘one nation, one money’), exploring its contribution to the successful internal devaluation in the Baltic states during the economic crisis of 2008–2010. Contrary to the predictions of renowned experts in economics and finance, Estonia, Latvia and Lithuania were able to keep the peg of their national currencies to euro. Because of peculiar features of their histories (a brief period of independence with national currencies allegedly based on a gold standard, interrupted by prolonged Soviet occupation and the despised ‘wooden rouble’) monetary nationalism was very strong in the restored independent Baltic states. Monetary nationalism predisposed their indigenous populations to embrace the neoliberal model of capitalism and to accept the welfare cost of the defence of currency pegging during the crisis. Paradoxically, the success was self‐defeating, as it enabled the Baltic states to join Eurozone, abolishing national currencies. Theorizing about this case study of Baltic monetary nationalism, this paper closes with the interpretation of the rise and demise of national currencies as the reversal of the Weberian disenchantment process. Monetary nationalism (making money a core part of national identity) is a product of this reversal.

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Race to the Eurozone: Why Latvia Joined Before Lithuania

Abstract: ABSTRACT

Cited by 23 publications

References 13 publications

The Russian invasion of Ukraine and the exchange rate of the Polish zloty: A fallacy of monetary autonomy?

The Russian invasion of Ukraine and the exchange rate of the Polish zloty: A fallacy of monetary autonomy?

The more the Merrier? The reaction of euro area stock markets to new members

The glory and demise of monetary nationalism in the post‐communist Baltic states

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