IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Can We Have Both? - Real and Nominal Convergence

Listed author(s):
  • Kateøina Šmídková

Candidate countries for accession to the EU often view EU convergence criteria as difficult given that the period of faster growth that real convergence necessitates is usually associated with higher inflation. This paper argues that it is important to focus on the mechanism of real convergence in this regard. If economic growth is accelerated by virtue of the closing of a technology gap, the processes of nominal and real convergence can indeed be compatible. In order to analyze this hypothesis, model simulations were run for five accession countries assuming a scenario in which FDI increases exogenously. The model used for simulation is a modified version of the model used in a related research project of Barrell, Holland, Kovacs, Jakab, Smidkova, Sepp, and Cufer (2001). According to simulation results, CPI falls and GDP per capita increases compared to the baseline following the introduction of an FDI shock. Although the results are not identical for all five countries, the hypothesis of compatibility of convergence criteria is generally supported.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Article provided by Charles University Prague, Faculty of Social Sciences in its journal Finance a uver - Czech Journal of Economics and Finance.

Volume (Year): 51 (2001)
Issue (Month): 6 (June)
Pages: 376-387

in new window

Handle: RePEc:fau:fauart:v:51:y:2001:i:6:p:376-387
Contact details of provider: Postal:
Opletalova 26, CZ-110 00 Prague

Phone: +420 2 222112330
Fax: +420 2 22112304
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:fau:fauart:v:51:y:2001:i:6:p:376-387. 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: (Lenka Herrmannova)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.