The money demand and the loss of interest for the euro in Romania

Claudiu Albulescu () and Dominique Pépin ()

Applied Economics Letters, 2019, vol. 26, issue 3, 196-201

Abstract: We generalize a money demand micro-founded model to explain Romanians’ recent loss of interest for the euro. We show that the reason behind this loss of interest is a severe decline in the relative degree of the euro liquidity against that of the Romanian leu. Our empirical findings also suggest that the two currencies are rather complements than substitutes, providing thus evidence for a reduced level of monetary integration of Romania with the Euro area. These results put into question the interest for the euro adoption in the next period.

Date: 2019
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DOI: 10.1080/13504851.2018.1456645

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