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N° 102 |
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| Issue 2, 2005 |
| Price
Convergence in EU-Accession Countries: Evidence from the International Comparison |
Martin Cihák
Tomáš Holub |
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| The authors analyse
price convergence in new EU countries. They estimate the price level elasticity
with respect to the GDP in PPP to be 0.7–0.9 percent. They also analyse
additional sources of price level convergence, such as terms-of-trade changes
or price deregulation. The average speed of real exchange rate appreciation is
estimated at about 3 percent a year, and its implications for fulfilling the Maastricht
criteria are discussed. Focusing on adjustments in the structures of relative
prices, the authors find that it may take about 10–25 years for new EU countries
to converge to that of the least developed EU countries. |
Abstract |
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Full Text |
| Inflation;
Relative Prices; Real Exchange Rate; Balassa-Samuelson Model |
Keywords |
| E31;
E52; E58; F15; P22 |
JEL classification |
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Order form |
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