Exchange rate regimes and shocks asymmetry: the case of the accession countries

Babetskii, Ian; Boone, Laurence; Maurel, Mathilde

doi:10.1016/j.jce.2004.02.010

Cited by 46 publications

(32 citation statements)

References 22 publications

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“…As a result, we expect to find significant nominal convergence for these countries. Finally, our results are consistent with Babetskii et al (2004) who find that the Baltic states converge more than the other transition countries in their sample and attribute their finding to the exchange rate regimes.…”

Section: Data and Resultssupporting

confidence: 92%

“…Our findings have important implications for the choice of an exchange rate regime and the time of entry to the Euro zone by the new members before they consider a formal and permanent peg to the Euro. Babetskii et al (2004), Maurel (1998, 1999), Backè et al (2003), Brada and Kutan (2001), Fidrmuc and Korhonen (2003), and Richards and Tersman (1996) investigate the convergence of the candidate countries to EU standards. Most of these papers do not provide comprehensive evidence in terms of country coverage and they rely on relatively small time-series data sets.…”

Section: Introductionmentioning

confidence: 99%

“…Some studies focus on nominal convergence, while others examine only real convergence to EU standards. Babetskii et al (2004) analyze both nominal and real convergence of the CEE8, in addition to the experiences of Ireland, Portugal, and Spain. Using the Kalman filter, these authors study the time-varying correlation of demand and supply shocks between these countries and the Euro area.…”

Section: Introductionmentioning

confidence: 99%

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Real and nominal stochastic convergence: Are the new EU members ready to join the Euro zone?

Kutan

Yigit

2005

Journal of Comparative Economics

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A key requirement for the new members to join the European Economic and Monetary Union (EMU) is real and financial convergence to European Union (EU) levels. This paper expands the analysis in [Kočenda, E., Macroeconomic convergence in transition economies, Journal of Comparative Economics 29 (2001) 1-23] and [Kutan, A., Yigit, T., Nominal and real stochastic convergence of transition economies, Journal of Comparative Economics 32 (2004) 23-36] by investigating the convergence of the new EU members to these standards. Using panel unit root techniques, we find strong evidence of real stochastic convergence for all new members, which indicates that they adjust to Euro-area output shocks. However, the degree of nominal convergence is idiosyncratic. The Baltic states exhibit the strongest monetary policy and price-level convergence, suggesting that they are ready to adopt the Euro. However, Central and East European countries should address the reasons for their lack of convergence before adopting the Euro. © 2005 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved

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Section: Data and Resultssupporting

confidence: 92%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Real and nominal stochastic convergence: Are the new EU members ready to join the Euro zone?

Kutan

Yigit

2005

Journal of Comparative Economics

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“…However, more recent studies display conflicting results. Babetskii et al (2004) report significant convergence of demand shocks, but divergence of supply shocks. Horvath and Rátfai (2004) show that shocks among the core and candidate EU countries tend to be uncorrelated.…”

Section: A Brief Review Of the Literaturementioning

confidence: 99%

Pilgrims to the Eurozone: How far, how fast?

2006

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In our analysis, we re-examine the nominal and real convergence of all recent 10 European Union (EU) members to EU standards. Testing for monetary convergence has significant implications for interim optimal exchange rate and monetary policies before a formal and permanent link to the euro, while real convergence is the ultimate objective of economic integration. Novel features of the paper include broader measures of real convergence in both euro as well as local currencies, an examination of inflation and interest rate convergence with respect to the Maastricht benchmarks, and employment of more appropriate tests of convergence allowing for structural breaks. The results indicate slow but steady per-capita real income convergence towards EU standards. On the other hand, evidence indicates significant strong inflation and interest rate convergence. Policy implications of the paper are also discussed. #

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“…Most available studies (see Horvath/Ratfai 2004, Fidrmuc/Korhonen 2003 indicate that the new member's business cycles are, at best, imperfectly aligned with the Eurozone. Unless there is rapid improvement in this respect (as envisaged by Babetskii/Boone/Maurel 2004), the newcomers will require adjustment mechanisms other than independent monetary policy to help their labor market deal with asymmetric shocks. Labor mobility is such an adjustment mechanism.…”

Section: Introductionmentioning

confidence: 99%

Labor Mobility During Transition: Evidence from the Czech Republic

Fidrmuc

2005

SSRN Journal

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Exchange rate regimes and shocks asymmetry: the case of the accession countries

Cited by 46 publications

References 22 publications

Real and nominal stochastic convergence: Are the new EU members ready to join the Euro zone?

Real and nominal stochastic convergence: Are the new EU members ready to join the Euro zone?

Pilgrims to the Eurozone: How far, how fast?

Labor Mobility During Transition: Evidence from the Czech Republic

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