Exchange Rate Regimes and Nominal Convergence in the CEECs
AbstractThis paper examines, in the context of future EMU membership of the Central and Eastern European countiries (CEECs), the interaction between fiscal policy and the price level in different exchange rate regimes. The theoretical framework is based on the Fiscal Theory of the Price Level (FTPL). The re sults show that a credibly fixed exchange rate is inconsistent with fiscal irresponsibility, while adopting the common currency enables the conduct of ir-responsible policies with the result that a rise in the level of debt by one member country raises the common price level of the whole union.
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Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0209007.
Length: 50 pages
Date of creation: 19 Sep 2002
Date of revision:
Note: Type of Document - SWP; prepared on PC; pages: 50
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Exchange rare regimes; Inflation; Fiscal theory of the price level; Transition economies;
Find related papers by JEL classification:
- E00 - Macroeconomics and Monetary Economics - - General - - - General
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-09-28 (All new papers)
- NEP-CBA-2002-09-28 (Central Banking)
- NEP-EEC-2002-09-28 (European Economics)
- NEP-IFN-2002-09-28 (International Finance)
- NEP-RMG-2002-09-28 (Risk Management)
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