Real Convergence, Capital Flows, and Monetary Policy: Notes on the European Transition Countries

Susan Schadler, EURO ADOPTION IN CENTRAL AND EASTERN EUROPE: OPPORTUNITIES AND CHALLENGES, p. 209, International Monetary Fund, 2005

Posted: 18 Jun 2009 Last revised: 24 Jun 2009

See all articles by Leslie Lipschitz

Leslie Lipschitz

IMF Institute

Timothy Lane

International Monetary Fund (IMF) - Policy Development and Review Department

Alexandros Mourmouras

International Monetary Fund (IMF) - Policy Development and Review Department

Date Written: June 17, 2005

Abstract

This paper is about real convergence, capital flows, and monetary policy in the European transition countries. It shows how differences in factor endowments coupled with Balassa-Samuelson real exchange rate effects will motivate capital flows, exacerbate the complexity of monetary policy formulation and implementation, and render the economy particularly sensitive to shifts in risk premia. It then goes on to assess alternative exchange rate regimes in this difficult context.

Keywords: Real Convergence, Capital Flows, and Monetary Policy

JEL Classification: E00, F21

Suggested Citation

Lipschitz, Leslie and Lane, Timothy and Mourmouras, Alexandros, Real Convergence, Capital Flows, and Monetary Policy: Notes on the European Transition Countries (June 17, 2005). Susan Schadler, EURO ADOPTION IN CENTRAL AND EASTERN EUROPE: OPPORTUNITIES AND CHALLENGES, p. 209, International Monetary Fund, 2005, Available at SSRN: https://ssrn.com/abstract=1421446

Leslie Lipschitz (Contact Author)

IMF Institute ( email )

700 19th St. NW
Washington, DC 20431
United States
202-623-8866 (Phone)

Timothy Lane

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Washington, DC 20431
United States
202-623-7648 (Phone)
202-623-4405 (Fax)

Alexandros Mourmouras

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Room 5-311
Washington, DC 20431
United States
202-623-5402 (Phone)
202-589-5402 (Fax)

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