Monetary Policy in the Czech Republic and EMU Accession

Jiøí Jonáš

Czech Journal of Economics and Finance (Finance a uver), 2001, vol. 51, issue 9, 472-487

Abstract: This article discusses monetary policy issues that arise in connection with the expected entry of the Czech Republic into the EMU. The paper first discusses the disinflation path specified in the Czech National Bank?s (CNB) long-term monetary strategy, and the quantification of inflation corresponding to price stability.Considered next is the issue of what room exists for price level convergence between the Czech Republic and the euro area in the period before and after EMU membership, either by means of a higher rate of inflation or by means of a nominal appreciation of the Czech koruna. The author concludes that the CNB?s long-term inflation target, and institutional constraints regarding prices and nominal exchange rate movements in the period before joining the EMU, should not seriously limit the possibility of price level convergence.Lastly, the author briefly describes the mutual compatibility of the Maastricht criteria under the condition of the rapid growth of labor productivity. During the pre-accession EU period, and during ERM II membership, nominal exchange rate flexibility will be sufficiently large to absorb any inflationary effects related to the relatively high growth of labor productivity.

Keywords: inflation targeting; disinflation; nominal convergence; European Monetary Union; Balassa-Samuelson effect; real exchange rate appreciation (search for similar items in EconPapers)
JEL-codes: E52 E58 F33 (search for similar items in EconPapers)
Date: 2001
References: Add references at CitEc
Citations:

Downloads: (external link)
http://journal.fsv.cuni.cz/storage/614_472-487.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fau:fauart:v:51:y:2001:i:9:p:472-487

Access Statistics for this article

More articles in Czech Journal of Economics and Finance (Finance a uver) from Charles University Prague, Faculty of Social Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Natalie Svarcova ().