This note examines recent evidence on the convergence of per capita incomes in Central and Eastern Europe. The motivation for revisiting this topic is a revival of interest among policymakers in speeding up the convergence process, after it apparently stalled during the financial crisis of 2008–2012 and the subsequent slow recovery. There are two main findings. First, the choice of benchmarks can make a significant difference for assessments of convergence. Most studies seem to ignore this “fine print” of data. Second, despite disappointments, the goal of convergence remains a useful anchor for economic policy in CEE. Going forward, it would be important to recognise that convergence is a slow process, but nevertheless requires sustained reforms to avoid prolonged periods of stagnation or pronounced booms and busts.
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Calculated as τ = − ln(0.5)/β.
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This note is based on my introductory remarks to the panel How much catching-up is still out there? at the 23rd Dubrovnik Economic Conference. The views expressed are those of the author and not necessarily those of the BIS. I would like to thank Paul Wachtel and participants of a seminar at Croatian National Bank for helpful comments.
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Mihaljek, D. Convergence in Central and Eastern Europe: Can All Get to EU Average?. Comp Econ Stud 60, 217–229 (2018). https://doi.org/10.1057/s41294-018-0063-7
- Per capita income
- European Union
- Central and Eastern Europe
- Great Financial Crisis