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The Maastricht Inflation Criterion: "Saints" and "Sinners"

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  • Ales Bulir
  • Jaromir Hurnik

Abstract

The Maastricht inflation criterion, designed in the early 1990s to bring “high-inflation†EU countries into line with “low-inflation†countries prior to the introduction of the euro, poses challenges for both new EU member countries and the European Central Bank. While the criterion has positively influenced the public stance toward low inflation, it has biased the choice of the disinflation strategy toward short-run, fiat measures—rather than adopting structural reforms with longer-term benefits—with unpleasant consequences for the efficiency of the eurozone transmission mechanism. The criterion is also unnecessarily tight for new member countries, as it mainly reflects cyclical developments.

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Paper provided by Czech National Bank, Research Department in its series Working Papers with number 2006/8.

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Date of creation: Dec 2006
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Handle: RePEc:cnb:wpaper:2006/8

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Keywords: ERM2; Maastricht inflation criterion; new EU member countries.;

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Citations

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Cited by:
  1. Anca Pruteanu-Podpiera & Laurent Weill & Franziska Schobert, 2007. "Market Power and Efficiency in the Czech Banking Sector," Working Papers 2007/6, Czech National Bank, Research Department.
  2. Ales Bulir & Roman Horvath & Lubos Komarek & Martin Melecky & Katerina Smidkova, 2006. "CNB Economic Research Bulletin: ERMII and Euro Adoption," Occasional Publications - Edited Volumes, Czech National Bank, Research Department, edition 2, volume 4, number rb04/2 edited by Jan Frait, August.
  3. Jan Filacek, 2007. "Why and How to Assess Inflation Target Fulfilment," Working Papers 2007/11, Czech National Bank, Research Department.

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