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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| 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: | 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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