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Zumer, Tina; Cufer, Uros --- "Real nominal convergence" [2003] ELECD 20; 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 14

Section Title: Real nominal convergence

Author(s): Zumer, Tina; Cufer, Uros

Number of pages: 3

Extract:

14. Real nominal convergence

Tina Zumer and Uros Cufer

The debate on real and nominal convergence attracts much attention with
the accession countries approaching membership of the EU. It is straight-
forward to talk about nominal convergence criteria, but it is rather unclear
what real convergence criteria are. The former were set out in the Treaty of
Maastricht, but nothing has been specified about the latter. In EMU the
common monetary policy is concerned with the developments in the euro
area as a whole and cannot promote the catching-up process of any partic-
ular country. Therefore a country's compliance with real economic conver-
gence criteria is important for the ECB's policy of maintaining price
stability.
It is in the interest of Slovenia to fully integrate into EU and EMU as
soon as possible. Although no specific additional criteria have been set out
for Slovenia's participation in the EU, the criteria for participating in EMU
are of particular interest if monetary integration, first in the form of ERM
II, is to follow immediately upon EU membership. For this step the achieve-
ment of nominal and real convergence is a necessary precondition.
The problem all the accession countries are facing is how to balance the
two. They may be seen as a trade-off, but they go hand in hand. There is
the potential danger that the candidate countries might, in order to fulfil
the nominal convergence criteria, grow at a lower rate than they potentially
could and ...