Mooslechner, Peter --- "Some remarks on 'How to balance real and nominal convergence': an introductory statement" [2003] ELECD 18; in Tumpel-Gugerell, Gertrude; Mooslechner, Peter (eds), "Economic Convergence and Divergence in Europe" (Edward Elgar Publishing, 2003)

Book Title: Economic Convergence and Divergence in Europe

Editor(s): Tumpel-Gugerell, Gertrude; Mooslechner, Peter

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843762416

Section: Chapter 12

Section Title: Some remarks on 'How to balance real and nominal convergence': an introductory statement

Author(s): Mooslechner, Peter

Number of pages: 3

Extract:

12. Some remarks on `How to balance
real and nominal convergence': an
introductory statement
Peter Mooslechner

Part IV includes the views of several competent representatives from the
central banks of some accession countries on how to balance nominal and
real convergence. Here I briefly sketch the terms used and the questions
involved.
The term `nominal convergence' relates to the process of nominal vari-
ables approaching stability levels. These variables comprise mainly the level
of inflation, the size of exchange rate movements and the level of long-term
interest rates. In addition, fiscal variables are often included. The corre-
sponding Maastricht criteria for participation in the euro area can be seen
as target points for the nominal convergence process.
`Real convergence' is often related to the adjustment of economic struc-
tures or to the building of an institutional and legal framework. However,
the most commonly used dimension of real convergence relates to levels of
economic development. In other words, to the catching up of poorer coun-
tries' income per capita levels (calculated at the exchange rate) to a certain
target level of income per capita, for instance the level of a benchmark
country or the average level of several countries. This catching up can take
place through real growth differentials, through price level convergence (via
real appreciation) or through both of these.
While the authors in Part III describe various aspects of real convergence
achievements in terms of structural change to date, Part IV focuses on the
interlinkage between real and ...