Accession and Real Exchange Movements: A Comparison

Abstract

This paper analyzes disparities among normal and real exchange rate movements across the Central and European (CEE) countries from 1991 to 1997. The method of analyzing such processes Is to c whether the differentials of exchange rate changes converge or diverge over time. Currently ten CEE countries have formally applied for full membership in the European Union. The results support convergence in general but indicate a wide disparity in the degree of convergence. From the real exchange rate standpoint the paper identifies the best candidates to join the European Union in the first round of accession.