Price level convergence dynamics in the CR and the accession strategy to the euro-zone

Czech economy has recently accelerated the real economic convergence to the European average. Nevertheless, in terms of price convergence the Czech economy is still lagging behind the expected dynamics, which should theoretically respond to the pace of relative economic growth. This asymmetry may (as one of many other factors) contribute to some difficulties in stabilizing Czech inflation during the two-years transition period before accession to the Euro-zone, when price convergence criterion and exchange rate stability criterion should be simultaneously met. The paper points out selected issues of the Czech nominal convergence dynamics and emphasizes possible negative impacts of restrictive monetary policy measures (pushing for low inflation rate and stable exchange rate vis-à-vis euro) on the real growth of the Czech economy. In this respect, the paper tries to find some lessons from Slovenian and Greek approach for the arrangement of the Czech monetary policy in the pre-accession period.