PRICE CONVERGENCE TO THE EURO AREA AND PREPAREDNESS OF THE CZECH REPUBLIC FOR THE ADOPTION OF THE EURO

MOJMIR, HELISEK and ROMAN, MENTLIK (2014) PRICE CONVERGENCE TO THE EURO AREA AND PREPAREDNESS OF THE CZECH REPUBLIC FOR THE ADOPTION OF THE EURO. In: Second International Conference on Advances In Social Science, Management and Human Behaviour - SMHB 2014, 25 - 26 October, 2014, City-West, 8005 Zurich, Switzerland.

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Abstract

A monetary union accession is preconditioned by sufficient real convergence of an acceding country to existing member countries of such monetary union. By default, the price level convergence criterion is described as a deviation of an acceding country’s price level from the average price level of the euro area. The Czech price level is lower by 31.3% (2013). We believe this formulation of price convergence is not suitable. Weighted deviation of the Czech price level from the price levels of its main business partners is more cogent. According to the aforementioned new indicator, the Czech price level is only down by 24.5%. The paper also examines the correlation between the actual inflation and the perceived inflation in the euro area and in the Czech Republic, coming to a conclusion about expected significant increase in the perceived inflation after the euro introduction.

Item Type: Conference or Workshop Item (Paper)
Uncontrolled Keywords: Real convergence, price convergence, comparative price levels, actual and perceived inflation
Depositing User: Mr. John Steve
Date Deposited: 29 May 2019 07:58
Last Modified: 29 May 2019 07:58
URI: http://publications.theired.org/id/eprint/2943

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