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Current-Account Matters on the Way to EMU: The Transfer Problem Re-revisited
Bethge, Jan-Alexander | Ohr, Renate
Credit and Capital Markets – Kredit und Kapital, Vol. 40 (2007), Iss. 4 : pp. 495–525
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Jan-Alexander Bethge, Göttingen
Renate Ohr, Göttingen
References
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Abstract
Concerning recommendations for early Euro adoption in EU accession countries from Central and Eastern Europe we address potential trade-offs between real and nominal convergence from a novel perspective. Specifically, we discuss the modern transfer problem as a trigger of sudden stops and bring up the concept of current-account sustainability as an approach complementary to the appraisement of stabilizing central parities and conversion rates. From a policy perspective a non-structural case-study approach seems preferable including (1) an assessment of numerical sustainability benchmarks and (2) an analysis of the sources and effects of actual current-account deficits. Clearly, this amends OCA criteria with intertemporal cost-benefit considerations. (JEL F 32, F 34, F 36)