The Maastricht Criteria and the Euro: Has the Convergence Continued?

Polasek, Wolfgang and Amplatz, Christian (July 2003) The Maastricht Criteria and the Euro: Has the Convergence Continued? Former Series > Working Paper Series > IHS Economics Series 133


Download (1MB) | Preview


Abstract: We analyze the performance of the Maastricht convergence criteria (inflation, long-term interest rate, annual and overall public debt) of the European Monetary Union (EMU) that led to the introduction of the Euro on Jan. 1st 1999 as book currency. Defining 3 regimes, 1992-97, 1997-1999 and 2000-2001, we analyse convergence properties, like a smooth or a rough transition in the mean or variance shifts between these 3 regimes. Given the regimes, we test the convergence in econometric models to see if the first and second moments of the convergence process are time dependent. Furthermore we check for a smooth transition process between the regimes and if the convergence process has stabilized around a target path. We find that the speed of the convergence processes for the monetary authority controlled variables (inflation and interest rates) were very different from the government controlled variables annual deficit and the public debt.;

Item Type: IHS Series
Keywords: 'EMU convergence' 'Maastricht criteria' 'Heteroskedastic spline models' 'ARCH regime shifts' 'Inflation' 'Public deficits' 'Interest rates and public debt'
Classification Codes (e.g. JEL): C2, E1
Date Deposited: 26 Sep 2014 10:37
Last Modified: 27 Sep 2019 06:30
ISBN: 1605-7996

Actions (login required)

View Item View Item