The Stability and Growth Pact from the Perspective of the New Member States

Gábor Orbán () and György Szapáry
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Gábor Orbán: Magyar Nemzeti Bank

No 2004/4, MNB Working Papers from Magyar Nemzeti Bank (Central Bank of Hungary)

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 EMU. 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 eurozone members were able to do in the run-up to EMU. 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. (search for similar items in EconPapers)
JEL-codes: E61 H6 H87 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2004
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Citations: View citations in EconPapers (22)

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Related works:
Journal Article: The Stability and Growth Pact from the perspective of the new member states (2004)
Working Paper: The Stability and Growth Pact from the Perspective Of the New Member States (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:mnb:wpaper:2004/4

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