Inflation Convergence in Europe
Convergence has been a popular theme in applied economics since the seminal papers of Barro (1991) and Barro and Sala-i-Martin (1992). The very notion of convergence quickly becomes problematic from an academic viewpoint however when we try and formalise a framework to think about these issues. In the light of the abundance of available convergence concepts, it would be useful to have a more universal framework that encompassed existing concepts as special cases. Moreover, much of the convergence literature has treated the issue as a zero-one outcome. We argue that it is more sensible and useful for policy decision makers and academic researchers to consider also ongoing convergence over time. Assessing the progress of ongoing convergence is one interesting and important means of evaluating whether the Eastern European New Member Countries (NMC) of the European Union (EU) are getting closer to being deemed “ready” to join the European Monetary Union (EMU), that is, fulfilling the Maastricht convergence criteria.
KeywordsEuropean Union Euro Area Inflation Rate European Monetary Union Candidate Country
- Geweke J (1977) The dynamic factor analysis of economic time series models. Chapter 19. In: Aigner D, Goldberger A (eds) Latent variables in socioeconomic models. North-Holland, Amsterdam, pp 365–383Google Scholar
- Nitsch V (2004) Have a break, have a … national currency: when do monetary unions fall apart? CESifo Working Paper No. 1113Google Scholar
- Wold H (1938) A study in the analysis of stationary time series, 2nd edn. Amquist and Wicksell, StockholmGoogle Scholar