Conference Proceedings

Second International Conference on Advances In Social Science, Management and Human Behaviour - SMHB 2014

PRICE CONVERGENCE TO THE EURO AREA AND PREPAREDNESS OF THE CZECH REPUBLIC FOR THE ADOPTION OF THE EURO

Author(s) : MOJMIR HELISEK, ROMAN MENTLIK

Abstract

A monetary union accession is preconditioned by sufficient real convergence of an acceding country to existing member countries of such monetary union. By default, the price level convergence criterion is described as a deviation of an acceding country’s price level from the average price level of the euro area. The Czech price level is lower by 31.3% (2013). We believe this formulation of price convergence is not suitable. Weighted deviation of the Czech price level from the price levels of its main business partners is more cogent. According to the aforementioned new indicator, the Czech price level is only down by 24.5%. The paper also examines the correlation between the actual inflation and the perceived inflation in the euro area and in the Czech Republic, coming to a conclusion about expected significant increase in the perceived inflation after the euro introduction.

Conference Title : Second International Conference on Advances In Social Science, Management and Human Behaviour - SMHB 2014
Conference Date(s) : 25 - 26 October, 2014
Place : Hotel Novotel Zurich City-West, 8005 Zurich, Switzerland
No fo Author(s) : 2
DOI : 10.15224/978-1-63248-032-3-109
Page(s) : 34 - 38
Electronic ISBN : 978-1-63248-032-3
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