The Euro and Structural Reforms

This paper investigates whether or not the adoption of the Euro has
facilitated the introduction of structural reforms, defined as deregulation
in the product markets and liberalization and deregulation in the labor
markets. After reviewing the theoretical arguments that may link the
adoption of the Euro and structural reforms, we investigate the empirical
evidence. We find that the adoption of the Euro has been associated with
an acceleration of the pace of structural reforms in the product market.
The adoption of the Euro does not seem to have accelerated labor market
reforms in the "primary labor market;" however, the run up to the Euro
adoption seems to have been accompanied by wage moderation. We also
investigate issues concerning the sequencing of goods and labor market
reforms.