Nominal Convergence in the European Union

The paper deals with the process of economic convergence in the European Union. Depending on researched indicators, convergence is divided into nominal and real convergence. The aim of this paper is to analyze the nominal convergence in the European Union through the most used indicator that is comparative price level. An alternative concept to the nominal convergence is the Maastricht criteria, fulfillment of which is a condition for joining the European Monetary Union. While researching the Maastricht criteria is a broader form of nominal convergence, price levels in this paper present a narrower form of analysis in this paper through the comparative price level. Values of this indicator of EU Member States are compared to the average of the European Union (EU-28). Nominal convergence is connected with real convergence and both processes, changes in economic level and price level, occur simultaneously. By using simple regression analysis (linear model), the relationship between real and nominal convergence, was tested. Results showed that the correlation between researched indicators, i.e. gross domestic product per capita in PPS and comparative price level, is very tight. Countries with low economic level have low price level and on the contrary, countries with high economic level have high price level. The price level of the Czech Republic is, in comparison to the price level of the European Union, lower than would be appropriate for its economic level.