This paper examines the impact of the euro adoption on the economy of Lithuania during its first five years (2015-2019) as a member of the euro area. First, it assesses the impact of the euro adoption in Lithuania on interest rates and real exports, after which it investigates the impact on Lithuanian macroeconomic indicators with a LTDSGE model, using impulse response functions obtained in 2013 in research conducted by the Bank of Lithuania. The paper further estimates the impact of the euro adoption on Lithuanian macroeconomic indicators using the synthetic control method (SCM). The results of this paper confirm the main conclusions of the aforementioned 2013 study, namely, that the long-term benefits of the euro adoption were much higher than the costs, which were mainly short-term or could even be considered as valuable investments.
JEL Codes: E17, E52, F33, F45
The views expressed are those of the author(s) and do not necessarily represent those of the Bank of Lithuania.
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Assessment of the impact of the euro introduction on Lithuania’s economy during the first five years of membership in the euro area
Sigitas Šiaudinis, Linas Jurkšas, Rokas Kaminskas, Justina Gaižutytė, Hector Carcel, Laura Galdikienė