Nominal and Real Convergence of Czechia With the Euro Area

Abstract

The aim of this chapter is to examine the nominal and real convergence of Czechia. The importance of the convergence of Czechia with the euro area is linked to the future intention of joining the Economic and Monetary Union after the Maastricht criteria are met. This chapter covers the period from 2004 to 2021. We argue that nominal convergence is relative to the Maastricht criteria, when real convergence focuses on different areas: the Maastricht criteria, gross domestic product (GDP) per capita in purchasing power standards and real GDP growth rate, labour market (minimum labour costs and unemployment rates. Findings suggest that Czechia has reported the strongest real convergence in the area of relative economic level, moderate convergence of labour costs and divergence of unemployment. The nominal convergence analysis suggests that Czechia will not meet the Maastricht benchmarks in the near future and is not ready to join the euro area given its high inflation rate and the state of public finances.

Citation

Szkorupová, Z., Krkošková, R. and Szarowská, I. (2024), "Nominal and Real Convergence of Czechia With the Euro Area", Stavárek, D. and Tvrdoň, M. (Ed.) Modeling Economic Growth in Contemporary Czechia (Entrepreneurship and Global Economic Growth), Emerald Publishing Limited, Leeds, pp. 17-34. https://doi.org/10.1108/978-1-83753-840-920241002