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Meeting Maastricht: Nominal convergence of the new member states toward EMU

Pierre Siklos ()

Economic Modelling, 2010, vol. 27, issue 2, 507-515

Abstract: This paper estimates whether the new member states (NMS) that joined the EU in 2004 have achieved a form of inflation and long-term interest rate convergence. Using quarterly data from the mid-1990s, convergence is evaluated through a series of unit root and cointegration tests. Both univariate and panel tests are performed, including tests for a large number of combinations of inflation and interest rates satisfying the Maastricht inflation and long-term interest rate criteria. It is generally found that nominal convergence in inflation has been attained among the NMS. There is, however, less evidence of convergence in long-term interest rates. Possible exceptions include Estonia and the Czech Republic and, to a lesser extent, Slovakia which has since joined the euro area. There is also a large degree of consistency between the various unit root and cointegration tests in both the univariate and panel variations.

Keywords: Convergence; Unit; root; Cointegration; New; member; states (search for similar items in EconPapers)
Date: 2010
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