How Far From the Euro Area? Measuring Convergence of Inflation Rates in Eastern Europe
AbstractWe present a common factor framework of convergence which we implement using principal components analysis. We apply this technique to a dataset of monthly inflation rates of EMU and the Eastern European New Member Countries (NMC) over 1996-2007. In the earlier years, the NMC rates moved independently from an average of the three best performing countries over the past twelve months, while they moved somewhat closer in line with them in the later years. Looking at the sample of the EMU and NMC countries as a whole, there is evidence of a formation of convergence clubs across the two groups.
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Bibliographic InfoPaper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 09/1.
Date of creation: Jan 2009
Date of revision:
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Other versions of this item:
- Becker, Bettina & Hall, Stephen G., 2009. "How far from the Euro Area? Measuring convergence of inflation rates in Eastern Europe," Economic Modelling, Elsevier, vol. 26(4), pages 788-798, July.
- Bettina Becker & Stephen G. Hall, 2009. "How Far From the Euro Area? Measuring Convergence of Inflation Rates in Eastern Europe," Discussion Paper Series 2009_05, Department of Economics, Loughborough University, revised Mar 2009.
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- F31 - International Economics - - International Finance - - - Foreign Exchange
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-31 (All new papers)
- NEP-CBA-2009-01-31 (Central Banking)
- NEP-EEC-2009-01-31 (European Economics)
- NEP-MAC-2009-01-31 (Macroeconomics)
- NEP-MON-2009-01-31 (Monetary Economics)
- NEP-TRA-2009-01-31 (Transition Economics)
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