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Exchange Rate Regimes and Nominal Convergence in the CEECs

Author

Listed:
  • Marketta Järvinen

    (Finnish Ministry of Finance)

Abstract

This paper examines, in the context of future EMU membership of the Central and Eastern European countiries (CEECs), the interaction between fiscal policy and the price level in different exchange rate regimes. The theoretical framework is based on the Fiscal Theory of the Price Level (FTPL). The re sults show that a credibly fixed exchange rate is inconsistent with fiscal irresponsibility, while adopting the common currency enables the conduct of ir-responsible policies with the result that a rise in the level of debt by one member country raises the common price level of the whole union.

Suggested Citation

  • Marketta Järvinen, 2002. "Exchange Rate Regimes and Nominal Convergence in the CEECs," Macroeconomics 0209007, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0209007
    Note: Type of Document - SWP; prepared on PC; pages: 50
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0209/0209007.pdf
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    More about this item

    Keywords

    Exchange rare regimes; Inflation; Fiscal theory of the price level; Transition economies;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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