Monetary union and the Maastricht inflation criterion: the accession countries

Gulcin Ozkan, F. and Sibert, Anne and Sutherland, A. (2004) Monetary union and the Maastricht inflation criterion: the accession countries. Economics of Transition 12 (4), pp. 635-652. ISSN 1468-0351.

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Official URL: https://doi.org/10.1111/j.0967-0750.2004.00197.x

Abstract

We model an accession country facing a Maastricht‐type inflation criterion that specifies an inflation ceiling. In addition to deciding whether or not to satisfy this criterion, the country must decide how much costly economic reform to undertake. If the country puts enough weight on the future that it can credibly meet the inflation criterion no matter what the ceiling is, then the inflation criterion benefits the country but lowers reform. If the country puts less weight on the future, then a criterion with a properly chosen inflation ceiling can increase reform. We derive the inflation ceilings that maximize the country's welfare and its reform.

Metadata

Item Type:	Article
School:	Birkbeck Faculties and Schools > Faculty of Business and Law > Birkbeck Business School
Depositing User:	Sarah Hall
Date Deposited:	28 Jul 2020 06:35
Last Modified:	02 Aug 2023 18:01
URI:	https://eprints.bbk.ac.uk/id/eprint/32704

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