| By: |
Gábor Orbán;
György Szapáry |
| Abstract: |
The purpose of this paper is to examine the fiscal characteristics of the new
members in the light of the requirements of the SGP and the criticisms
levelled against the Pact and to see in what ways their initial conditions
differ from those faced by the current euro zone countries in the run-up to
the adoption of the euro. Overall, because of the lower debt levels and
greater yield convergence already achieved, the new members will be able to
rely less on gains from yield convergence than the current euro zone members
were able to do. EU accession will also have a negative net impact on the
budgets of the new members in the early years of membership. We also look at
the cyclical sensitivities of the budgets and find that in the new members the
smoothing capacity of the automatic stabilizers might be weaker than in the
current euro zone members. Beyond these general characteristics, we also
emphasize that there are large differences in the starting fiscal positions of
the new members. Some of the policy implications of our findings are discussed. |
| Keywords: |
EU enlargement, fiscal policy, fiscal rules, Stability and Growth Pact |
| JEL: |
E61 H6 H87 |
| Date: |
2004–07–01 |
| URL: |
http://d.repec.org/n?u=RePEc:wdi:papers:2004-709&r=pke |