Exchange rate convergence and Eurozone entry III : selected exchange rate issues in candidate countries
Abstract
The paper contains a general analysis of the exchange rate convergence process of new European Union member states and candidate countries. Following an introduction, we discuss exchange rate strategies applied during periods of economic transition.
Emphasis is given to a hypothetical evaluation of the exchange rate criterion. We review the exchange rate strategies of transition countries using an analytical framework similar to the EU member states, and discuss the selected strategies presented in the ?Pre-accession Economic Programmes? and convergence programs.
In light of the exchange rate experience of EU-15 countries, we summarize the main determinants of exchange rate movement in transition countries. Finally, we discuss factors which will influence ERM2 accession.