Exchange Rate Arrangements in the Accession to the EMU
After accession to the European Union, new member countries have to decide the optimal path to the adoption of the euro. Some have argued that the euro should be adopted only when a sufficient degree of real convergence has been achieved. The idea is that real exchange rates will be affected by a real appreciation trend, which would imply higher inflation when countries enter the euro zone. This paper shows that Balassa–Samuelson effects are relevant, but such long-term considerations cannot justify maintaining flexibility of exchange rates for a long time. Another set of arguments in favour of delaying adoption of the euro is based on shorter-term considerations, namely the possibility of using nominal exchange rates to achieve a real exchange rate target and maintain competitiveness. However, this policy of real exchange rate targeting is likely to induce higher and more persistent inflation rates. This paper finds that the arguments in favour of flexibility of exchange rate and delay in the adoption of the euro are rather weak, and therefore a fast adoption of the Euro should be considered. Comparative Economic Studies (2004) 46, 4–22. doi:10.1057/palgrave.ces.8100046
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.
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.
Volume (Year): 46 (2004)
Issue (Month): 1 (March)
|Contact details of provider:|| Web page: http://www.palgrave-journals.com/|
|Order Information:||Web: http://www.springer.com/economics/journal/41294/PS2|
When requesting a correction, please mention this item's handle: RePEc:pal:compes:v:46:y:2004:i:1:p:4-22. 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.