Prague Economic Papers 2004, 13(2):176-186 | DOI: 10.18267/j.pep.238

Accession to the Monetary Union and Slovenian Monetary Policy Under Exchange Rate Targeting

Peter Mikek
School of Economics and Business, University of Maribor, Razlagova 20, 2000 Maribor, Slovenia (email: PETER.MIKEK@UNI-MB.SI).

After joining the EU in 2004, Slovenia and other new members will have to adopt the euro. Their accession to the European Monetary Union will require stabilizing and later fixing their exchange rates and thus restrictive monetary policy. The paper shows that successful stabilization of the exchange rate also requires restrictive fiscal policy. Fiscal policy that is not compatible with the goals of monetary policy would prevent stabilization of the exchange rate.

Keywords: inflation targeting, price level, fiscal regime, monetary union, monetary policy reaction function, monetary feedback, exchange rate targeting
JEL classification: E50, E60, F40

Published: January 1, 2004  Show citation

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Mikek, P. (2004). Accession to the Monetary Union and Slovenian Monetary Policy Under Exchange Rate Targeting. Prague Economic Papers, 13(2), 176-186. doi: 10.18267/j.pep.238
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