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Journal articles (2000), Économie Internationale / International Economics, pp. 65-76

Pays de l'Est : le coût d'une candidature à l'Union Européenne Monétaire

BESANCENOT D., VRANCEANU Radu , WARIN T.

This paper analyzes the macroeconomic consequences of joining the EMU for transition economies It emphasizes a hidden cost that may occur during the probationary period, where the applicant country must keep the euro exchange rate within a narrow fluctuation band. The model builds a two-period game with incomplete information. It is shown that, under certain circumstances, the suboptimal pooling equilibrium may occur. In this configuration, interest rates include a devaluation risk premium, and the economic activity is depressed.

BESANCENOT, D., VRANCEANU, R. and WARIN, T. (2000). Pays de l'Est : le coût d'une candidature à l'Union Européenne Monétaire. Économie Internationale / International Economics, pp. 65-76.