Psychological costs of currency transition: evidence from the euro adoption

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F67985998%3A_____%2F16%3A00467593" target="_blank" >RIV/67985998:_____/16:00467593 - isvavai.cz</a>

Result on the web

<a href="http://dx.doi.org/10.1016/j.ejpoleco.2016.10.002" target="_blank" >http://dx.doi.org/10.1016/j.ejpoleco.2016.10.002</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1016/j.ejpoleco.2016.10.002" target="_blank" >10.1016/j.ejpoleco.2016.10.002</a>

Result language

angličtina

Original language name

Psychological costs of currency transition: evidence from the euro adoption

Original language description

This paper assesses the perceived individual psychological costs of adhering to the Euro. We use the difference-in-differences approach (DD), comparing individual levels of satisfaction with the economy in Slovakia immediately before and after the introduction of the Euro, with similar individuals in neighboring Czech Republic, which did not adopt the Euro. Both countries were economically and politically integrated for decades, and display similar macroeconomic behavior before and after the currency change in Slovakia. What we assess is not the actual, economic, costs stemming from the Euro adoption, but the change in utility as perceived by the individuals. There is evidence of substantial psychological costs associated with currency transition, especially for the old, the unemployed, the poorly educated and households with children. Our results are robust to the use of alternative control groups and to estimation procedures using the DD matching approach. The significant perceived costs uncovered in this paper suggest policy-makers should not ignore them when considering a sweeping economic change such as the adoption of a new currency.

Czech name

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Czech description

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Type

J_x - Unclassified - Peer-reviewed scientific article (Jimp, Jsc and Jost)

CEP classification

AH - Economics

OECD FORD branch

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Project

—

Continuities

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year

2016

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

European Journal of Political Economy

ISSN

0176-2680

e-ISSN

—

Volume of the periodical

45

Issue of the periodical within the volume

December

Country of publishing house

NL - THE KINGDOM OF THE NETHERLANDS

Number of pages

12

Pages from-to

89-100

UT code for WoS article

000390828100006

EID of the result in the Scopus database

2-s2.0-85006257778