<abstract xmlns="http://www.w3.org/1999/xhtml">

<sec><h3>Research background</h3>
<p>with the introduction of the euro as the domestic currency, economies have faced inflationary pressures caused by price convergence towards higher levels. During the last period of significant negative shocks from the environment, by entering the euro area, the negative effects of the likelihood of inflation caused by the introduction of the euro may be absent.</p>
</sec>
<sec><h3>Purpose</h3>
<p>the aim of this paper is to prove that inflation caused by joining the euro area will not materialize due to the negative effects of external shocks.</p>
</sec>
<sec><h3>Research methodology</h3>
<p>A panel analysis with a fixed effects model was conducted for two models. Model 1 represents the countries that introduced the euro before the escalation of the global financial crisis and Model 2 represents the countries that introduced the euro after the development of the global financial crisis.</p>
</sec>
<sec><h3>Results</h3>
<p>the research confirmed that due to current negative external shocks and rising long-term interest rates in financial markets, the effect of inflation due to the introduction of the euro will be absent among EU members that will adopt the euro as a common currency in the next few years.</p>
</sec>
<sec><h3>Novelty</h3>
<p>The results of the research contribute to the scientific prediction of business and financial trends. The creators of macroeconomic models and monetary policy can use the results to define measures, instruments and activities more precisely for achieving and maintaining macroeconomic balance.</p>
</sec>
</abstract>

Research background
with the introduction of the euro as the domestic currency, economies have faced inflationary pressures caused by price convergence towards higher levels. During the last period of significant negative shocks from the environment, by entering the euro area, the negative effects of the likelihood of inflation caused by the introduction of the euro may be absent.

Purpose
the aim of this paper is to prove that inflation caused by joining the euro area will not materialize due to the negative effects of external shocks.

Research methodology
A panel analysis with a fixed effects model was conducted for two models. Model 1 represents the countries that introduced the euro before the escalation of the global financial crisis and Model 2 represents the countries that introduced the euro after the development of the global financial crisis.

Results
the research confirmed that due to current negative external shocks and rising long-term interest rates in financial markets, the effect of inflation due to the introduction of the euro will be absent among EU members that will adopt the euro as a common currency in the next few years.

Novelty
The results of the research contribute to the scientific prediction of business and financial trends. The creators of macroeconomic models and monetary policy can use the results to define measures, instruments and activities more precisely for achieving and maintaining macroeconomic balance.

Confronting the Inflationary Pressures of Introducing the Euro with the Effects of Negative External Shocks

Folia Oeconomica Stetinensia

This work is licensed under the Creative Commons Attribution-ShareAlike 4.0 International License.

Research background
with the introduction of the euro as the domestic currency, economies have faced inflationary pressures caused by price convergence towards...

Confronting the Inflationary Pressures of Introducing the Euro with the Effects of Negative External Shocks

Published Online: Jun 09, 2023

Page range: 194 - 207

Received: Nov 21, 2022

Accepted: Mar 16, 2023

DOI: https://doi.org/10.2478/foli-2023-0010

Keywords
emerging economies, euro, external shocks, inflation, recession

© 2023 Petra Popek Biškupec et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-ShareAlike 4.0 International License.

Confronting the Inflationary Pressures of Introducing the Euro with the Effects of Negative External Shocks

Published Online: Jun 09, 2023

Page range: 194 - 207

Received: Nov 21, 2022

Accepted: Mar 16, 2023

DOI: https://doi.org/10.2478/foli-2023-0010

Keywordsemerging economies, euro, external shocks, inflation, recession

© 2023 Petra Popek Biškupec et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-ShareAlike 4.0 International License.

Keywords
emerging economies, euro, external shocks, inflation, recession