Monetary Research Center

21/2020 The loss of discipline after EU Enlargement: a theoretical note
Issued in Sunday, November 22, 2020
Michael Dooley (Dooley, 1997; Dooley, 2000) put forward an insurance model (or moral hazard model) of currency crises, which read in the modified Roger Garrison (Garrison, 2001) economic framework gives a good theoretical basis for the explanation of the overall dynamics of the post-communist transformation and especially the loss of discipline after EU accession. The article analyses also the role of monetary regimes (currency anchor) and EU enlargement (political and geostrategic anchor) and their relationships. The article proposes graphical representation and introducing some new concepts such as “insurance possibility frontier”, “market for insurable funds”, etc.  

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