To have the Euro or not? : A comparison of Sweden and Finland

Abstract: The purpose of this paper is to study whether Sweden or Finland was initially better suited for the euro, and whether Sweden has benefited from remaining outside the third step of the European Monetary Union as opposed to Finland.  The analysis is based on the optimum currency area theory.  The findings show that Sweden initially was better suited for euro adoption than Finland, but the ECB’s monetary policy has suite Finland quite well.  However, Sweden appears to have benefited from remaining outside the euro.