Real and monetary convergence within the European Union and between the European Union and candidate countries: A rolling cointegration approach

Josef Brada, Ali Kutan and Su Zhou

No B 05-2002, ZEI Working Papers from University of Bonn, ZEI - Center for European Integration Studies

Abstract: We use rolling cointegration to measure the convergence of base money, M2, the consumer price index and industrial output between two reference countries, Germany and France, and recent EU members and some transition economy candidates. Counties that recently joined the EU exhibit time-varying cointegration with the reference countries over much of the 1980-2000 sample period. Cointegration for the transition economies was comparable for M2 and prices, but less so for monetary policy and industrial output. This suggests that a peg to the Euro upon accession is feasible for the East European candidates, but the benefits of joining the Euro zone are as yet limited.

Keywords: European Union; convergence; currency areas; enlargement; cointegration; policy coordination (search for similar items in EconPapers)
JEL-codes: F15 F36 F42 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (12)

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Related works:
Working Paper: Real and Monetary Convergence within the European Union and Between the European Union and Candidate Countries: A Rolling Cointegration Approach (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zeiwps:b052002

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