The Political Economy of Euro Introduction to Croatia: a Golden Goose or a Stinging Viper?

Introduction

‍Euro adoption in Croatia has become a very salient public and political issue, especially since the launch of the Strategy for the Adoption of the Euro under the auspices of the Government of the Republic of Croatia and the Croatian National Bank (CNB) in late 2017. This publication continues to cover this delicate and often contentious debate and is structured as follows. The first section analyses the impact of the euro on Croatia’s macroeconomic framework, primarily focusing on the availability and effectiveness of policy levers for aggregate demand management in the Croatian context, such as: monetary, exchange rate, fiscal and macroprudential policy. It also considers structural issues pertaining to aggregate supply. The second section sheds light on the cost-benefit analysis of euro adoption, and connects the pros and cons with the key societal and political actors.

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