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Adoption of the euro: Why is the Czech approach cautious?

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  • Kateřina Šmídková

Abstract

When published, the Czech Euro-area Accession Strategy signalled a rather cautious approach to adopting the euro in comparison to the intentions of other EU acceding countries. The euro adoption was scheduled around 2010 and the ERM II was viewed only as a waiting room. The Czech strategy was attuned to specific features of the Czech economy. Although inflation and nominal interest rates converged to the EMU levels before EU entry, large fiscal deficits and the need for significant fiscal reform did not make it possible to meet the Maastrich criteria soon. Moreover, real convergence was viewed as a priority for the forthcoming years and, consequently, the strategy was aimed at maintaining nominal flexibility in order to cushion consequences of price and wage rigidities during the peak period of the catch-up process. Copyright International Atlantic Economic Society 2004

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  • Kateřina Šmídková, 2004. "Adoption of the euro: Why is the Czech approach cautious?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 32(4), pages 302-311, December.
    • Handle: RePEc:kap:atlecj:v:32:y:2004:i:4:p:302-311
    DOI: 10.1007/BF02304235
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    References listed on IDEAS

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    1. Kateřina Šmídková & Ray Barrell & Dawn Holland, 2003. "Estimates of fundamental real exchange rates for the five eu pre-accession countries," Prague Economic Papers, Prague University of Economics and Business, vol. 2003(4), pages 291-315.
    2. Katerina Smidkova & Miroslav Hrncir & Andrew Yurkovsky, 2000. "Transition to the Strategy of Inflation Targeting," Eastern European Economics, Taylor & Francis Journals, vol. 38(6), pages 13-42, December.
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    Cited by:

    1. Farhang Niroomand & Edward Nissan, 2007. "Socio-Economic Gaps within the EU: A Comparison," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 13(3), pages 365-378, August.
    2. repec:kap:iaecre:v:13:y:2007:i:3:p:365-378 is not listed on IDEAS

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