How is real convergence driving nominal convergence in the new EU Member States?

Lein, Sarah M. and Leon-Ledesma, Miguel A. and Nerlich, Carolin (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. (The full text of this publication is not available from this repository)

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Official URL
http://dx.doi.org/10.1016/j.jimonfin.2007.12.004

Abstract

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: 28 May 2014 14:31
Resource URI: http://kar.kent.ac.uk/id/eprint/6148 (The current URI for this page, for reference purposes)
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