Price Convergence in EU-Accession Countries: Evidence from the International Comparison

Martin Cihak () and Tomas Holub

Economie Internationale, 2005, issue 102, 59-82

Abstract: The authors analyse price convergence in new EU countries. They estimate the price level elasticity with respect to the GDP in PPP to be 0.7–0.9 percent. They also analyse additional sources of price level convergence, such as terms-of-trade changes or price deregulation. The average speed of real exchange rate appreciation is estimated at about 3 percent a year, and its implications for fulfilling the Maastricht criteria are discussed. Focusing on adjustments in the structures of relative prices, the authors find that it may take about 10–25 years for new EU countries to converge to that of the least developed EU countries.

Keywords: Inflation; prices; exchange rate; convergence; international comparison; Balassa-Samuelson model (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 F15 P22 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepiei:2005-2tc

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