DP658 Inflation Convergence During the Transition to EMU

Author(s): Paul De Grauwe
Publication Date: June 1992
Keyword(s): Inflation, Monetary Union
JEL(s): E58, F15, F33, F36
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=658

According to the Maastricht Treaty, EMS countries will be able to join EMU if their inflation rates are not more than 1.5% higher than the average of the three lowest inflation rates in the EMS. In this paper I analyse the likelihood of inflation rates converging to the levels set out in the Maastricht Treaty, and conclude that this is unlikely to be the case. I study whether the Maastricht convergence requirement for inflation rates is not needlessly tight.