Monetary Convergence of the EU Candidates to the Euro: A Theoretical Framework and Policy Implications

ZEI Working Paper No. B 25-2001

32 Pages Posted: 10 Feb 2005  

Lucjan T. Orlowski

Sacred Heart University - John F. Welch College of Business

Date Written: September 2001

Abstract

A flexible approach to direct inflation targeting is a viable monetary policy choice for transition economies that is believed to facilitate both the economic transition and the monetary convergence to the euro. Following this assumption, an analytical model investigating the link between the inflation process and monetary variables in transition economies is advanced in this study. The empirical testing is conducted for Poland, the Czech Republic and Hungary. The analysis recommends that the monetary convergence begins with inflation targeting and concludes with a full-fledged euroization. It further advocates the application of flexible benchmarks of monetary convergence that would accommodate various non-monetary factors affecting inflation in transition economies.

JEL Classification: E32, E52, P33

Suggested Citation

Orlowski, Lucjan T., Monetary Convergence of the EU Candidates to the Euro: A Theoretical Framework and Policy Implications (September 2001). ZEI Working Paper No. B 25-2001. Available at SSRN: https://ssrn.com/abstract=664802 or http://dx.doi.org/10.2139/ssrn.664802

Lucjan T. Orlowski (Contact Author)

Sacred Heart University - John F. Welch College of Business ( email )

5151 Park Avenue
Fairfield, CT 06825
United States
203-371-7858 (Phone)

HOME PAGE: http://www.sacredheart.edu/ltorlowski.cfm

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