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Pegging the CEECs Exchange Rates to the Euro

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  • Laurence Boone
  • Mathilde Maurel

Abstract

Pegging the CEECs exchange rates to the Euro can be assessed by using the criteria for entering the EMU (European Monetary Union). This approach is explicitly taking into account the process of enlargement started in June 1993 in Copenhagen, where a subset of CEECs was selected for admission into the EU. Fiscal discipline, implied by the Maastricht criteria, enhances the transition process. But the question of whether pegging the currency contributes to further stabilize inflation can be asked only when economic recovery resumes, and when inflation does not result mainly from relative price adjustment. The analysis of business cycles correlation helps to answer that question. The correlation of industrial production and unemployment cycles in the CEECs and the EU, point towards a deeper integration of the CEECs with Germany than with the EU. They also emphasize that pegging the currencies is a good policy option for Central European Countries.

Suggested Citation

  • Laurence Boone & Mathilde Maurel, 2001. "Pegging the CEECs Exchange Rates to the Euro," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 77-89.
    • Handle: RePEc:bas:econth:y:2001:i:3:p:77-89
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F3 - International Economics - - International Finance
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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