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

Lein, Sarah M., Leon-Ledesma, Miguel A., Nerlich, Carolin (2008) How is real convergence driving nominal convergence in the new EU Member States? Journal of International Money and Finance, 27 (2). pp. 227-248. ISSN 0261-5606. (doi:10.1016/j.jimonfin.2007.12.004) (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided)

The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided. (Contact us about this Publication)
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: Article
DOI/Identification number: 10.1016/j.jimonfin.2007.12.004
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 UTC
Last Modified: 01 Aug 2019 10:30 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/6148 (The current URI for this page, for reference purposes)
Leon-Ledesma, Miguel A.: https://orcid.org/0000-0002-3558-2990
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