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Accession to the Monetary Union and Slovenian Monetary Policy Under Exchange Rate Targeting

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  • Peter Mikek

Abstract

After joining the EU in 2004, Slovenia and other new members will have to adopt the euro. Their accession to the European Monetary Union will require stabilizing and later fixing their exchange rates and thus restrictive monetary policy. The paper shows that successful stabilization of the exchange rate also requires restrictive fiscal policy. Fiscal policy that is not compatible with the goals of monetary policy would prevent stabilization of the exchange rate.

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Bibliographic Info

Article provided by University of Economics, Prague in its journal Prague Economic Papers.

Volume (Year): 2004 (2004)
Issue (Month): 2 ()
Pages: 176-186

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Handle: RePEc:prg:jnlpep:v:2004:y:2004:i:2:id:238:p:176-186

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Related research

Keywords: price level; monetary union; monetary policy reaction function; monetary feedback; inflation targeting; fiscal regime; exchange rate targeting;

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References

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  1. International Monetary Fund, 2000. "Exchange Rate Regimes in Selected Advanced Transition Economies," IMF Policy Discussion Papers 00/3, International Monetary Fund.
  2. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
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  4. Svensson, Lars E O, 1998. "Open-Economy Inflation Targeting," CEPR Discussion Papers 1989, C.E.P.R. Discussion Papers.
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  16. Julio Rotemberg & Michael Woodford, 1997. "An Optimization-Based Econometric Framework for the Evaluation of Monetary Policy," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 297-361 National Bureau of Economic Research, Inc.
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Cited by:
  1. Mikek, Peter, 2008. "Alternative monetary policies and fiscal regime in new EU members," Economic Systems, Elsevier, vol. 32(4), pages 335-353, December.

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