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

被引:0
|
作者
Michał Brzoza-Brzezina
Pascal Jacquinot
Marcin Kolasa
机构
[1] Narodowy Bank Polski and Warsaw School of Economics,Directorate General of Research
[2] European Central Bank,undefined
来源
Open Economies Review | 2014年 / 25卷
关键词
Boom-bust cycles; Euro area accession; Dynamic general equilibrium models; E52; E58; E63;
D O I
暂无
中图分类号
学科分类号
摘要
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.
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页码:35 / 69
页数:34
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