@article{d5c6337f045642088859eab7f00f1363,
title = "Euro adoption policies in the second decade: the remarkable cases of the Baltic States",
abstract = "The second decade of Economic and Monetary Union (EMU), starting with the financial crisis morphing into the sovereign debt crisis, had diverging effects on member states. The Baltic States were hit particularly hard. Faced with an immediate collapse of their economies, the Baltic States were advised by international organisations to float their currencies; instead, these countries chose to speed up their commitment to join the euro including the choice to keep the exchange rate fixed. Why? In this paper, we argue that the main reason for this decision needs to be found in the domestic politics of these three Baltic States. The domestic actors we look at include, among others, monetary authorities, government and opposition. Even when faced with strong international criticism, the three Baltic State governments chose their own path, which in this case included continuing their planned euro adoption policies even in the face of costly domestic adjustments.",
keywords = "Baltic States, CRISIS, DOMESTIC POLITICS, Economic and Monetary Union, INSTITUTIONS, INTEGRATION, INTERESTS, SUPPORT, domestic politics, euro adoption, financial crisis, sovereign debt crisis",
author = "Assem Dandashly and Amy Verdun",
note = "Funding Information: Although there had been many warnings by local financial and economic experts, the Latvian prime minister at that time, Ivars Godmanis, did little to respond proactively to the early signs of an upcoming recession and only took action to reduce public spending by the end of 2008 (Kajaks ). However, the planned measures by the government were insufficient. The government in late 2008 applied for financial support from the IMF and the EU (Aslund and Dombrovskis , 33–47). One of the reasons was to preserve the fixed exchange rate with the euro (Banincova , 188). Economists and experts such as Rory MacFarquahar, an emerging markets expert at Goldman Sachs, questioned the rationale behind Latvia{\textquoteright}s crisis management strategy and its sustainability without devaluing its currency (Financial Times ). With several subsidiaries of major Swedish banks present in the Baltic states, the issue was also pertinent to the Swedish parent bank. Therefore, Sweden recognised the need to provide Latvia with financial support until the IMF program was finalised (Koyama , 46). Funding Information: An earlier version of this paper was presented at the 49th Annual UACES conference in Lisbon 1–4 September 2019, and at the {\textquoteleft}EMU at Twenty workshop{\textquoteright} at Leiden University (16–17 November 2018) https://www.uvic.ca/interdisciplinary/europe/eu-grants/network/eurosem-18-21/the-emu-at-twenty/index.php . The latter conference was supported by the Institute of Political Science at Leiden University and launched the Jean Monnet Network entitled {\textquoteleft}The Politics of the European Semester: EU Coordination and Domestic Political Institutions (EUROSEM){\textquoteright} Agreement number: 600,110-EPP-1-2018-1-CA-EPPJMO-NETWORK (Grant agreement nr 2018–1359), cofounded by the Erasmus+ programme of the European Union.” The authors would like to thank Edgars Eihmanis, Sebastian Heidebrecht, David Howarth, Geoffrey Underhill, Ramūnas Vilpi{\v s}auskas, the journal editors and two anonymous referees of this journal for their valuable comments. This research was supported by the Social Sciences and Humanities Research Council of Canada. Publisher Copyright: {\textcopyright} 2020, {\textcopyright} 2020 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.",
year = "2020",
month = apr,
day = "2",
doi = "10.1080/07036337.2020.1730355",
language = "English",
volume = "42",
pages = "381--397",
journal = "Journal of European Integration",
issn = "0703-6337",
publisher = "Routledge/Taylor & Francis Group",
number = "3",
}