Can Cyprus Cope Inside the EMU?
The purpose of this paper is to investigate whether Cyprus was ready to join the euro area and whether it can cope with the challenges inside the Economic and Monetary Union (EMU), given the loss of monetary policy autonomy. We examine the performance of the economy of Cyprus towards the road to the EMU, in terms of satisfying the Optimum Currency Area (OCA) criteria and achieving nominal and real convergence. We find that Cyprus satisfied the OCA criteria to a satisfactory degree and achieved full nominal convergence and relatively high real convergence. However, Cyprus needs to preserve fiscal consolidation given the recent inflation pressures and accelerate structural reforms with emphasis on the labour market, thus enhancing productivity and flexibility and offsetting possible adverse effects on competitiveness resulting from the real effective appreciation of the euro. Reforming the social security system is also imperative in order to improve the long-term sustainability of public finances.
Volume (Year): 2 (2008)
Issue (Month): 1 (June)
|Contact details of provider:|| Postal: |
Phone: + 357 22892429
Fax: + 357 22892426
Web page: http://www.ucy.ac.cy/goto/ecorece/el-GR/HOME.aspx
More information through EDIRC
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Frankel, Jeffrey A & Rose, Andrew K, 1996.
"The Endogeneity of the Optimum Currency Area Criteria,"
CEPR Discussion Papers
1473, C.E.P.R. Discussion Papers.
- Frankel, Jeffrey A & Rose, Andrew K, 1998. "The Endogeneity of the Optimum Currency Area Criteria," Economic Journal, Royal Economic Society, vol. 108(449), pages 1009-25, July.
- Jeffrey A. Frankel & Andrew K. Rose, 1996. "The Endogeneity of the Optimum Currency Area Criteria," NBER Working Papers 5700, National Bureau of Economic Research, Inc.
- Paul de Grauwe & Francesco Paolo Mongelli, 2005.
"Endogeneities of Optimum Currency Areas: What brings Countries Sharing a Single Currency Closer together?,"
Working Papers de Economia (Economics Working Papers)
29, Departamento de Economia, Gestão e Engenharia Industrial, Universidade de Aveiro.
- De Grauwe, Paul & Mongelli, Francesco Paolo, 2005. "Endogeneities of optimum currency areas: what brings countries sharing a single currency closer together?," Working Paper Series 0468, European Central Bank.
When requesting a correction, please mention this item's handle: RePEc:erc:cypepr:v:2:y:2008:i:1:p:63-79. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Angela Shekersavva)
If references are entirely missing, you can add them using this form.