NDLI: Can We Prevent Boom-Bust Cycles During Euro Area Accession?

Content Provider	Springer Nature Link
Author	Brzoza Brzezina, Michał Jacquit, Pascal Kolasa, Marcin
Copyright Year	2014
Abstract	Euro-area accession caused boom-bust cycles in several catching-up economies. Declining interest rates and easier financing conditions fuelled spending and borrowing from abroad. Over time inflation deteriorated external competitiveness, turning the boom into a bust. We ask whether such a scenario can be avoided using macroeconomic tools that are available in the period of joining a monetary union: central parity revaluation, fiscal tightening or increased taxation. We find that exchange rate revaluation is the most attractive option. It simultaneously trims the expansion of output and domestic demand, reduces the cost pressure and ranks first in terms of welfare.
Starting Page	35
Ending Page	69
Page Count	35
File Format	PDF
ISSN	09237992
Journal	Open Economies Review
Volume Number	25
Issue Number	1
e-ISSN	1573708X
Language	English
Publisher	Springer US
Publisher Date	2014-01-15
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Boom-bust cycles Euro area accession Dynamic general equilibrium models International Economics Development Economics European Integration Macroeconomics/Monetary Economics Economic Policy Financial Economics
Content Type	Text
Resource Type	Article
Subject	Economics and Econometrics

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1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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Can We Prevent Boom-Bust Cycles During Euro Area Accession?