THE LONG-TERM REAL CONVERGENCE OF CENTRAL AND EASTERN EUROPE ECONOMIES TO THE EURO AREA –THE SIGMA AND BETA CONVERGENCE

The real convergence is a prerequisite for the long-term development of the EU member states, enhancing the effectiveness of monetary policy in the context of integration in the Economic and Monetary Union. Also, real convergence is a solid foundation for maintaining the nominal convergence criteria on a medium-term horizon, even after the time of adoption of the single currency. The objective of this paper is the assessment of long-term real convergence of the CEE economies to the Euro area during 1998-2010, in terms of recovering the disparities between living standards in CEE countries and the European Monetary Union by using the sigma and beta converge indicators, both absolute and conditional. The results show that the long-term real convergence is confirmed and the pace of the catch-up process in the period 1998-2010 was an alert one. Nevertheless, in recent years real convergence of the CEE countries to the Euro area has slowed significantly due to the economic and financial crisis.