Prague Economic Papers 2007, 16(3):195-219 | DOI: 10.18267/j.pep.305

Real and Nominal Convergence and the New EU Member States - Actual State and Implications

Václav ®ďárek, Jaromír ©indel
Centre for Economic Studies, University of Economics and Management, nám. I. P. Pavlova 3, CZ - 120 00 Praha 2 (vaclav.zdarek@vsem.cz, jara.sindel@centrum.cz).

This paper analyses the process of nominal and real convergence of the new Member States of the European Union. It also discusses theoretical and methodological issues relating to this process. The importance of nominal and real convergence is underlined in connection with a successful catching-up. The EU-10 economies experienced robust economic growth in recent years, which had a positive impact on the convergence process. Although this favourable development of real convergence (GDP per capita in PPS) is accompanied by a simultaneous price (nominal) convergence (changes in relative prices and a convergence of price levels), the comparative price level is still biased towards lower level in comparison with the per capita income.

Keywords: competitiveness, nominal and real convergence, Balassa-Samuelson effect, relative price level
JEL classification: E30, F15, O11

Published: January 1, 2007  Show citation

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®ďárek, V., & ©indel, J. (2007). Real and Nominal Convergence and the New EU Member States - Actual State and Implications. Prague Economic Papers, 16(3), 195-219. doi: 10.18267/j.pep.305
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