THE EXCHANGE RATE TRILEMMA IN EUROPE: A CASE STUDY

Mercea (Handro) Patricia Amalia
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Mercea (Handro) Patricia Amalia: University of Craiova Faculty of Economics and Business Administration

Annals of University of Craiova - Economic Sciences Series, 2019, vol. 1, issue 47, 79-86

Abstract: The accession in European Union of ten Central and Eastern European countries, marks the end of the first phase of integration of these economies into Western European economic bloc. In many respects, similarities with developed countries begin to be obvious: opening borders, free capital flows and free people movement, trade development, greater transparency of monetary and fiscal policy, low inflation rates, and macroeconomic stability. The next step - the euro adoption - is both an obligation and a challenge. The debate about „real convergence” and „open economy” sets up the dilemmas for monetary authorities. The result will end into a mix between: real currency appreciation, an increased current account deficit, the accumulation of inflation and international reserve.

Keywords: monetary policy; exchange rate; inflation; currency union; european integration (search for similar items in EconPapers)
JEL-codes: E42 E43 E44 E58 (search for similar items in EconPapers)
Date: 2019
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