DP658 | Inflation Convergence During the Transition to EMU


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According to the Maastricht Treaty, EMS countries will be able to join EMU if their inflation rates are not more than 1.5% higher than the average of the three lowest inflation rates in the EMS. In this paper I analyse the likelihood of inflation rates converging to the levels set out in the Maastricht Treaty, and conclude that this is unlikely to be the case. I study whether the Maastricht convergence requirement for inflation rates is not needlessly tight.