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Monetary Policy before Euro Adoption: Challenges for EU New Members

Jan Fil??cek (), Roman Horv??th () and Michal Skořepa ()
Authors registered in the RePEc Author Service: Jan Filáček and Roman Horvath

No wp853, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: This article analyzes the main issues for monetary policy in new EU member states before their euro adoption. These are typically rooted in the challenge of fulfilling concurrently of the Maastricht inflation and exchange rate criterion, as these countries are experiencing equilibrium real exchange rate appreciation. In this article we first distinguish between the wording, written interpretation and ???revealed??? interpretation of the inflation and exchange rate criteria. Then we discuss the options for monetary policy in the period of fulfilment of these criteria in terms of its transparency, its continuity with the previous monetary policy regime, the choice of central parity for the ERM II, the setting of the fluctuation bandwidth, the probability of fulfilment of both criteria and the impact on economic stability.

Keywords: monetary policy; euro adoption; ERM II; EU (search for similar items in EconPapers)
JEL-codes: E58 E52 F42 F33 (search for similar items in EconPapers)
Pages: pages
Date: 2006-11-01
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac, nep-mon and nep-tra
References: View references in EconPapers View complete reference list from CitEc
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