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Estonian Road To Euro Area – A Struggle With Inflation Within The Currency Board System

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  • Dorota Zbierzchowska

    (College of social and media culture)

Abstract

Estonia is an example of a country, which from the beginning of its transformation employed rigid course regime in the form of a currency board. After successful suppression of inflation in the first decade of transformation one could expect, that after joining the European Union and the ERMII system Estonia will soon become a member of the Euro area. However within the next few years of economic development Estonian economy could not fulfill the condition of stability of prices. Only in the time of the World Economic Crisis and Estonian great economic breakdown all criteria of convergence were satisfied. In January 2011 the country will become a member of the monetary union. The aim of this paper is to answer the question, whether processes of inflation in Estonian economy were conditioned by the presence of a rigid currency board system. One will examine here, whether there occurs - postulated in theory - convergence of inflation pace between a country employing a currency board system and a country with a reserve currency.

Suggested Citation

  • Dorota Zbierzchowska, 2010. "Estonian Road To Euro Area – A Struggle With Inflation Within The Currency Board System," Oeconomia Copernicana, Institute of Economic Research, vol. 1(1), pages 25-42, December.
    • Handle: RePEc:pes:ieroec:v:1:y:2010:i:1:p:25-42
    DOI: 10.12775/OeC.2010.002
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    References listed on IDEAS

    as
    1. Urmas Sepp & Raoul Lättemäe & Martti Randveer, 2002. "The History and Sustainability of the CBA in Estonia," Macroeconomics 0212002, University Library of Munich, Germany.
    2. repec:zbw:bofitp:1999_009 is not listed on IDEAS
    3. Zuzana Brixiova & Margaret H. Morgan & Andreas Wörgötter, 2010. "On The Road to Euro: How Synchronized Is Estonia with the Euro zone?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 7(1), pages 203-227, June.
    4. repec:zbw:bofitp:1999_006 is not listed on IDEAS
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