Home | Databases | WorldLII | Search | Feedback Edited Legal Collections Data

Coricelli, Fabrizio --- "Fiscal discipline and the adoption of the euro for new members of the European Union" [2004] ELECD 165; in Liebscher, Klaus; Christl, Josef; Mooslechner, Peter; Ritzberger-Grünwald, Doris (eds), "The Economic Potential of a Larger Europe" (Edward Elgar Publishing, 2004)

Book Title: The Economic Potential of a Larger Europe

Editor(s): Liebscher, Klaus; Christl, Josef; Mooslechner, Peter; Ritzberger-Grünwald, Doris

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843769620

Section: Chapter 20

Section Title: Fiscal discipline and the adoption of the euro for new members of the European Union

Author(s): Coricelli, Fabrizio

Number of pages: 12

Extract:

20. Fiscal discipline and the adoption
of the euro for new members of the
European Union
Fabrizio Coricelli1

1. INTRODUCTION

Although achieving macroeconomic stability was not a requirement for EU
entry, the candidate countries (CEECs from now on) have made remark-
able progress in this field on the path to accession, as effectively summar-
ized by the convergence of inflation rates to EU levels (see Figure 20.1).
However, in the run-up to EU entry some clear inconsistencies have
become evident in the policy frameworks followed by several candidate
countries. Specifically, budget deficits soared as fiscal policies were loos-
ened in several CEECs (see Table 20.1).
At the same time, there is an increasingly favourable attitude towards
postponing the adoption of the euro. The timing of euro area entry and
fiscal discipline are related, as there is a widespread perception that a later




Figure 20.1 Convergence in inflation rates

233
234 Stabilization of expectations

Table 20.1 Consolidated general government balance (in % of GDP)

2001 2002
Bulgaria 0.86 0.65
Croatia 6.80 4.80
Czech Republic 5.11 6.74
Estonia 0.68 1.19
Hungary 4.70 9.19
Latvia 1.95 2.70
Lithuania 1.96 1.19
Poland 5.50 6.70
Romania 3.50 2.70
Slovak Republic 7.30 7.20
Slovenia 1.14 3.21

Source: EBRD.
entry into the euro area will result in fewer restraints being put on fiscal
policy. Furthermore, EU institutions, such as the European ...