Real and monetary convergence between the European Union’s core and recent member countries: A rolling cointegration approach

Josef C. Brada; Ali M. Kutan; Su Zhou

doi:10.1016/j.jbankfin.2004.06.024

Journal of Banking & Finance Vol. 29 No. 1 2005

Real and monetary convergence between the European Union’s core and recent member countries: A rolling cointegration approach

Josef C. Brada¹; Ali M. Kutan^2,3; Su Zhou⁴

¹ Arizona State University · ² Southern Illinois University Edwardsville · ³ Center of Advanced European Studies and Research · ⁴ The University of Texas at San Antonio

Abstract

We use rolling cointegration to measure the convergence of base money, M2, the CPI and industrial output between Germany and France and recent EU members and some transition countries that are now joining the EU. Countries that joined the EU previously exhibit time-varying cointegration with the core countries over the 1980–2000 sample period. Cointegration for the transition economies was comparable for M2 and prices, but not for monetary policy and industrial output. Thus a peg to the Euro soon after accession is feasible for the East European countries, but the benefits of joining the Euro zone are as yet limited.

DOI: 10.1016/j.jbankfin.2004.06.024
Volume: 29
Issue: 1
Pages: 249-270
Language: en
Sources: openalex crossref bibtex:phds-export.bib

Real and monetary convergence between the European Union’s core and recent member countries: A rolling cointegration approach

Abstract

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