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The Maastricht Convergence Criteria and Monetary Regimes for the EMU Accession Countries


  • Lipinska, Anna


The goal of this paper is to study the ability of different monetary regimes to satisfy the Maastricht criteria. We perform our analysis in the framework of a two-sector small open economy DSGE model with nominal rigidities exposed to both domestic and external shocks. We analyze the regimes that reflect the policy choices observed in the EMU Accession countries, i.e. peg regime, managed float regime and flexible exchange rate regime with CPI inflation targeting. There exists a significant trade-off between compliance with the CPI inflation criterion and the nominal interest rate criterion. The sensitivity analysis reveals that the probabability that some of the regimes will satisfy all the criteria increases with openness of the economy and also degree of substitution between traded goods. Moreover, provided that two previous conditions are satisfied, degree of exchange rate pass through determines which of the regimes can comply with the criteria. Low degree of pass through enables regimes with managed exchange rate to fulfill all the criteria while high degree of pass through implies that the CPI targeting regime satisfies all the criteria.

Suggested Citation

  • Lipinska, Anna, 2008. "The Maastricht Convergence Criteria and Monetary Regimes for the EMU Accession Countries," MPRA Paper 16375, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:16375

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    References listed on IDEAS

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    Cited by:

    1. Brzoza-Brzezina, Michał & Makarski, Krzysztof & Wesołowski, Grzegorz, 2014. "Would it have paid to be in the eurozone?," Economic Modelling, Elsevier, vol. 41(C), pages 66-79.
    2. Anna Lipińska & Morten Spange & Misa Tanaka, 2011. "International Spillover Effects and Monetary Policy Activism," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(8), pages 1735-1748, December.

    More about this item


    monetary regimes; the Maastricht convergence criteria; EMU accession economies;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics


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