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

Convergence Expectations and Convergence Strategies. Lessons from the Hungarian Experiences in the pre-EU period1

Listed author(s):
  • Agnes Csermely


    (Magyar Nemzeti Bank, Szabadság tér 8-9, H-1850 Budapest, Hungary.)

Registered author(s):

    Eurozone convergence provides a unique opportunity for accession countries to abandon macroeconomic stabilisation policies that suffer from weak credibility. On the other hand, expectations of future improvements in macroeconomic variables and trend appreciation of the currency may undermine the relationship between interest rates, exchange rates and economic fundamentals, making the economy vulnerable to sudden changes in market sentiments regarding the timing and path to Eurozone accession. Recent developments in Hungary illustrate the impact of changing expectations on exchange rate and interest rate volatility. Two lessons can be drawn from the Hungarian experience. First, benign market sentiment and easier access to finance does not imply less pressure to correct macroeconomic imbalances in the long run. Second, convergence strategies should be robust with respect to sudden shifts in capital flows. Programmes should maintain the shock absorbing capacity of fiscal and monetary policies and offer a contingency margin to ensure compliance with the announced adjustment plan in case of unforeseen developments. Slower convergence programmes might be more successful. Comparative Economic Studies (2004) 46, 104–126. doi:10.1057/palgrave.ces.8100043

    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:
    File Function: Link to full text PDF
    Download Restriction: Access to full text is restricted to subscribers.

    File URL:
    File Function: Link to full text HTML
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Palgrave Macmillan & Association for Comparative Economic Studies in its journal Comparative Economic Studies.

    Volume (Year): 46 (2004)
    Issue (Month): 1 (March)
    Pages: 104-126

    in new window

    Handle: RePEc:pal:compes:v:46:y:2004:i:1:p:104-126
    Contact details of provider: Web page:

    Web page:

    More information through EDIRC

    Order Information: Web:

    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:pal:compes:v:46:y:2004:i:1:p:104-126. 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: (Sonal Shukla)

    or (Rebekah McClure)

    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.