William Davidson Institute Working Paper 487
countries to the euro area members is expressed in a gradual elimination of these
differences even after becoming a part of the EU (and EMU)15. With the increasing
degree of integration into the EU, the applicant countries will catch up with the EU
income levels. This is a long-term process, which will determine specific inflation
differentials given the level of national income and its growth rates of each accession
country (see. table 1 and table.2)16.
|
Table 1. Inflation Differential (BG-EU15) | |||||
|
1995 |
1996 1997 1998 1999 |
2000 |
2001 | ||
|
annual average percentage change in inflation rate | |||||
|
EU-15 |
2.8 |
2.4 1.7 1.3 1.2 |
2.1 |
2.4 | |
|
BG |
69.1 |
116.6 1268.0 46.3 0.4 |
10.1 |
7.5 | |
|
Inflation | |||||
|
Differential |
66.3 |
114.2 1266.3 45.0 -0.8 |
8.0 |
5.1 | |
|
Source: |
WIIW. | ||||
|
Table 2. Real growth rate of GDP (%) | |||||
|
1996 |
1997 1998 1999 |
2000 |
2001 | ||
|
Eu-15 |
1.6 |
2.5 2.9 2.6 |
3.3 |
1.5 | |
|
Bulgaria |
-10.1 |
-7 3.5 2.4 |
5.8 |
4.0 | |
|
Growth |
-11.7 |
-9.5 0.6 -0.2 |
2.5 |
2.5 | |
|
Differential | |||||
|
Source: |
WIIW. | ||||
In the following section we will concentrate on the BS effect, which is
conventional and one of the widely accepted explanations of inflation processes in the
accession countries.
15 The catching-up process is still on the agenda of EU (and particularly of EMU) member countries
which experience different inflation rates due to price level convergence (see. ECB, 1999).
16 For a detailed presentation of real convergence mechanisms see also Barro and Sala-i-Martin
(1992), Kim (1997), Razin and Yuen (1995).
More intriguing information
1. The name is absent2. The ultimate determinants of central bank independence
3. EDUCATIONAL ACTIVITIES IN TENNESSEE ON WATER USE AND CONTROL - AGRICULTURAL PHASES
4. Correlates of Alcoholic Blackout Experience
5. The Modified- Classroom ObservationScheduletoMeasureIntenticnaCommunication( M-COSMIC): EvaluationofReliabilityandValidity
6. The name is absent
7. NVESTIGATING LEXICAL ACQUISITION PATTERNS: CONTEXT AND COGNITION
8. How does an infant acquire the ability of joint attention?: A Constructive Approach
9. Government spending composition, technical change and wage inequality
10. Measuring Semantic Similarity by Latent Relational Analysis