The Maastricht Inflation Criterion: What is the Effect of Expansion of the European Union?
Following the Maastricht criteria, a country seeking to join the European Monetary Union cannot have an inflation rate in excess of 1.5 percent plus the average inflation rates in the three 'best performing' EU countries. This inflation reference value is a non-increasing function of the number of EU members. Looking backwards, the effect of increasing the number of EU countries from 15 to 27would have been sizeable in 2003 and 2004, but relatively modest since 2005. Monte Carlo simulations show that the expansion of the EU from 15 to 27 members reduces the expected inflation reference value by 0.15-0.2 percentage points, but with a considerable probability of a larger reduction. The treatment of countries with negative inflation rates in the calculation of the reference value has a major impact on the results.
|Date of creation:||Nov 2007|
|Date of revision:|
|Contact details of provider:|| Postal: Postbus 98, 1000 AB Amsterdam|
Web page: http://www.dnb.nl/en/
More information through EDIRC
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.:
- John Lewis, 2007.
"Hitting and Hoping? Meeting the Exchange Rate and Inflation Criteria during a Period of Nominal Convergence,"
CESifo Working Paper Series
1902, CESifo Group Munich.
- Lewis, John, 2009. "Hitting and hoping?: Meeting the exchange rate and inflation criteria during a period of nominal convergence," European Journal of Political Economy, Elsevier, vol. 25(4), pages 508-524, December.
- John Lewis, 2007. "Hitting and Hoping? Meeting the Exchange Rate and Inflation Criteria During a Period of Nominal Convergence," DNB Working Papers 130, Netherlands Central Bank, Research Department.
- Buiter, Willem H., 2004. "To Purgatory and Beyond: When and How Should the Accession Countries from Central and Eastern Europe Become Full Members of EMU?," CEPR Discussion Papers 4342, C.E.P.R. Discussion Papers.
- Balázs Égert & Imed Drine & Kirsten Lommatzsch & Christophe Rault, 2005.
"The Balassa-Samuelson Effect in Central and Eastern Europe: Myth or Reality?,"
Documents de recherche
05-15, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
- Egert, Balazs & Drine, Imed & Lommatzsch, Kirsten & Rault, Christophe, 2003. "The Balassa-Samuelson effect in Central and Eastern Europe: myth or reality?," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 552-572, September.
- Balázs Égert & Imed Drine & Kirsten Lommatzsch & Christophe Rault, 2002. "The Balassa-Samuelson effect in Central and Eastern Europe: Myth or reality?," William Davidson Institute Working Papers Series 483, William Davidson Institute at the University of Michigan.
- Peter B. Kenen & Ellen E. Meade, 2003. "EU Accession and the Euro: Close Together or Far Apart?," Policy Briefs PB03-09, Peterson Institute for International Economics.
- Calmfors, Lars & Corsetti, Giancarlo & Devereux, Michael P. & Honkapohja, Seppo & Saint-Paul, Gilles & Sinn, Hans-Werner & Sturm, Jan-Egbert & Vives, Xavier, 2007. "The EEAG Report on the European Economy 2007," Munich Reprints in Economics 20006, University of Munich, Department of Economics.
- Dobrinsky, Rumen, 2006. "Catch-up inflation and nominal convergence: The balancing act for new EU entrants," Economic Systems, Elsevier, vol. 30(4), pages 424-442, December.
- Charles Wyplosz, 2006. "European Monetary Union: the dark sides of a major success," Economic Policy, CEPR;CES;MSH, vol. 21(46), pages 207-261, 04.
- Jonas, Jiri, 2006. "Euro adoption and Maastricht criteria: Rules or discretion?," Economic Systems, Elsevier, vol. 30(4), pages 328-345, December.
When requesting a correction, please mention this item's handle: RePEc:dnb:dnbwpp:151. 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: (Rob Vet)
If references are entirely missing, you can add them using this form.