Lein, S.M. and Leon-Ledesma, M.A. and Nerlich, C. (2008) How is real convergence driving nominal convergence in the new EU Member States? In: 11th International Conference on Macroeconomic Analysis and International Finance, May 24-26, 2007 , Univ Rethymno, Rethymno, Greece.
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We evaluate the empirical relevance of real convergence on the process of nominal convergence for the new EU Member States. We focus our discussion on two main channels: productivity growth and increased trade openness. Productivity growth can have a positive effect on price levels via the Balassa-Samuelson effect, whereas increased openness leads to reductions in mark-ups and costs and therefore can have a negative impact on prices. We empirically assess their relevance using a Structural VAR model to which we applied a model reduction algorithm. Our findings show that, in general, openness has had a negative impact and productivity growth a positive one on price level convergence with respect to the euro area.
|Item Type:||Conference or workshop item (Paper)|
|Uncontrolled keywords:||real convergence; nominal convergence; inflation; new EU member states|
|Subjects:||H Social Sciences > HB Economic Theory|
|Divisions:||Faculties > Social Sciences > School of Economics|
|Depositing User:||Miguel Leon-Ledesma|
|Date Deposited:||12 Mar 2009 14:59|
|Last Modified:||21 May 2011 00:17|
|Resource URI:||http://kar.kent.ac.uk/id/eprint/6148 (The current URI for this page, for reference purposes)|
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