The strategy for the adoption of the euro in the Czech Republic involves the entry of the Czech koruna into the ERM II mechanism for only the essential amount of time (approximately 2½ years). No date has yet been set for the introduction of the euro. The situation may, however, arise where it...

Two seemingly unconnected empirical results suggest an intriguing mechanism. First, economic integration helps harmonize prices internationally, with trade being the primary channel (Rogoff 1996, Goldberg and Knetter 1997). Second, monetary union may greatly increase the amount of trade among...