Price Convergence in EU-Accession Countries: Evidence from the International Comparison
AbstractThe authors analyse price convergence in new EU countries. They estimate the price level elasticity with respect to the GDP in PPP to be 0.7–0.9 percent. They also analyse additional sources of price level convergence, such as terms-of-trade changes or price deregulation. The average speed of real exchange rate appreciation is estimated at about 3 percent a year, and its implications for fulfilling the Maastricht criteria are discussed. Focusing on adjustments in the structures of relative prices, the authors find that it may take about 10–25 years for new EU countries to converge to that of the least developed EU countries.
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Bibliographic InfoArticle provided by CEPII research center in its journal Economie Internationale.
Volume (Year): (2005)
Issue (Month): 102 ()
Inflation; prices; exchange rate; convergence; international comparison; Balassa-Samuelson model;
Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- F15 - International Economics - - Trade - - - Economic Integration
- P22 - Economic Systems - - Socialist Systems and Transition Economies - - - Prices
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