Eurozone and Poland business cycles differ, caution against Poland adopting euro.
The article compares business cycles in the Eurozone and Poland using a DSGE approach. The researchers found that while structural parameters were similar, the persistence and volatility of shocks differed between the two economies. Output fluctuations were driven by similar demand shocks, but the Eurozone was affected by exogenous spending shocks while Poland was impacted by price markup shocks. The analysis suggests that Poland should not adopt the euro unless changes in macroeconomic and labor market policies are made.