Monetary policy in CEE is an important determinant in the wage bargaining process, because trade unions have to predict inflation as one component of future real wages. This paper scrutinizes whether countries in CEE that officially announce an inflation target are tempted to act...

This study places a strong emphasis on the ability of Central European countries to lower inflation and exchange rate risk premiums on their path of monetary convergence to the eurozone. A model of the nexus between both risk premiums is presented along with the recent evidence supporting...