IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Nominal and real stochastic convergence within transition economies and to the European Union: Evidence from panel data

  • Kutan, Ali M.
  • Yigit, Taner M.

This paper investigates the issue of real and nominal economic convergence of transition economies in two distinct ways: i) within their own groups as in Koèenda (2001) and ii) to the European Union (EU). We extend Koèenda’s study not only by using a more stable period (post-93) but also by employing a more recent panel estimation approach developed by Im, Pesaran, and Shin (IPS) (1997), which offers less restrictive assumptions about convergence by allowing heterogeneity in the convergence rates than previous panel unit root techniques. Relaxing the assumption of homogeneity in convergence rates yields less convergence in price level and money supply variables than reported by Koèenda. Again using the IPS method, we extend the investigation to examine the convergence of the first and second round candidate economies to EU standards. We find that the first-round candidates have made significant progress in monetary policy convergence with respect to EU and there is significant real convergence between the first round candidate economies and EU, but not for the second round candidate countries. The results have important implications for full EU membership preparations by these countries, including the choice of an optimal interim exchange rate policy.

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: http://econstor.eu/bitstream/10419/39599/1/361251408.pdf
Download Restriction: no

Paper provided by ZEI - Center for European Integration Studies, University of Bonn in its series ZEI Working Papers with number B 21-2002.

as
in new window

Length:
Date of creation: 2002
Date of revision:
Handle: RePEc:zbw:zeiwps:b212002
Contact details of provider: Postal: Walter-Flex-Straße 3, D - 53113 Bonn
Web page: http://www.zei.de/

More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Dibooglu, Selahattin & Kutan, Ali M., 2000. "Sources of real exchange rate fluctuations in transition economies: The case of Ploand and Hungary," ZEI Working Papers B 14-2000, ZEI - Center for European Integration Studies, University of Bonn.
  2. Fidrmuc, Jarko & Korhonen, Iikka, 2003. "Similarity of supply and demand shocks between the euro area and the CEECs," Economic Systems, Elsevier, vol. 27(3), pages 313-334, September.
  3. Brada, Josef C. & Ktan, Ali M., 2001. "The convergence of monetary policy between candidate countries and the European Union," ZEI Working Papers B 07-2001, ZEI - Center for European Integration Studies, University of Bonn.
  4. Ali M. Kutan & Josef C. Brada, 2000. "The evolution of monetary policy in transition economies," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 31-40.
  5. Richards, Anthony J. & Tersman, Gunnar H. R., 1996. "Growth, Nontradables, and Price Convergence in the Baltics," Journal of Comparative Economics, Elsevier, vol. 23(2), pages 121-145, October.
  6. Wu, Jhy-Lin & Chen, Show-Lin, 2001. " Mean Reversion of Interest Rates in the Eurocurrency Market," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(4), pages 459-73, September.
  7. Desai, Padma, 1998. "Macroeconomic Fragility and Exchange Rate Vulnerability: A Cautionary Record of Transition Economies," Journal of Comparative Economics, Elsevier, vol. 26(4), pages 621-641, December.
  8. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
  9. Brada, Josef C., 1998. "Introduction: Exchange Rates, Capital Flows, and Commercial Policies in Transition Economies," Journal of Comparative Economics, Elsevier, vol. 26(4), pages 613-620, December.
  10. Peter Backé & Jarko Fidrmuc & Thomas Reininger & Franz Schardax, 2002. "Price Dynamics in Central and Eastern European EU Accession," Working Papers 61, Oesterreichische Nationalbank (Austrian Central Bank).
Full references (including those not matched with items on IDEAS)

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:zbw:zeiwps:b212002. 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: (ZBW - German National Library of Economics)

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.