To be or not to be in the euro? Benefits and costs of monetary unification as perceived by voters in the Swedish euro referendum 2003

The Swedish referendum in September 2003 on adopting the euro or keeping the domestic currency, the krona, represents a unique event to examine the public’s perceptions of the benefits and costs of monetary unification. The voters chose between the two polar cases of exchange rate regimes: either a freely floating exchange rate or membership in a monetary union. Three major conclusions emerge from the analysis of the exit poll surveys gathered on the day of the referendum. First, the optimum currency area theory proves to be a constructive framework to predict voting behaviour across socio-economic groups and regions in Sweden, assuming voters behave in their self-interest. Second, the distribution of the expected benefits and costs across groups was a major determinant of their voting behavior. As predicted by theory, the Yes-vote was strongest among voters employed in the tradable sector, in high growth regions as well as among high-income earners and well educated. The No-vote was strongest among voters employed in the non-tradable sector, in particular in the public sector, and among low-income earners, the unemployed and the less educated – in short, among groups dependent on public-sector transfers to maintain their living standards in the event of adverse economic shocks. Third, political attitudes towards the European integration process heavily influenced the views of the voters towards the euro.