DP2018 | Economic Convergence of the CEECs with the EU

Publication Date

30/11/1998

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Abstract

This paper tries to assess how costly it would be for the CEECs to peg their exchange rates to the Euro. We use three types of criteria: institutional (the Maastricht criteria); some measure of real convergence; and the Optimal Currency Area criteria. The institutional criteria seem to be an important impediment to an 'immediate' accession. There is also a lot more to do in terms of real convergence. Finally, the correlations of industrial production and unemployment cycles in the CEECs and the EU, or other reference countries, such as Germany, Greece, France and Portugal point towards a deeper integration of the CEECs with Germany than with the EU. This reflects the old ties Germany had and still has with Eastern countries and the likely key role Germany is going to play in the process of EU enlargement to Eastern Europe.