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Central bank independence in Central and Eastern Europe on the eve of EU-enlargement
| Content Provider | Semantic Scholar |
|---|---|
| Author | Freytag, Andreas |
| Copyright Year | 2003 |
| Abstract | The EU-enlargement in mid-2004 will probably be followed by the accession to the European Monetary and Economic Union (EMU), depending on the individual state of convergence of the accession candidates. In this paper, we argue that institutional convergence, in particular central bank independence (CBI), is equally – if not more – important for a successful common monetary policy in an enlarged Euroland than nominal and real convergence, as it indicates an appropriate policy assignment and thereby fosters real and nominal convergence. The paper starts with an assessment of the state of convergence of CEE countries in nominal and real terms. Based on a constitutional political economy framework and the additional requirement for future EMU members to give their central banks an independent status, we then assess the degree of central bank independence in CEE. We apply a measure, namely the index of monetary commitment, which includes external criteria such as convertibility and exchange rate regimes. It can be shown that the degree of central bank independence in CEE countries is considerably high; however, there is a gap to the ECB’s independence with respect to external aspects of CBI. 1 This paper was initiated following a discussion on central banks’ independence at the ACE Phare research project „Alternative exchange rate regimes in transition economies“ second workshop in Strunjan, 15-16 June 2001, organized by the Institute for Economic Research (IER), Ljubljana. 2 University of Cologne, Robert-Koch-Str. 4, D-50931 Cologne, Germany, Tel.: ++49 221 470 4879, Fax: ++49 221 470 5187, e-mail: andreas.freytag@uni-koeln.de. This paper is part of a research project entitled “Economic Order and CBI in the Enlarged EMU“, the author is conducting for the Otto-Wolff-Institute for Economic Policy. In addition, the author gratefully acknowledges very helpful comments by Sandra Dvorsky, Ferdinand Fichtner, Marianne Keudel and Philipp Paulus. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://pdc.ceu.hu/archive/00001125/01/Occasional_paper_04.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
