Template-Type: ReDIF-Paper 1.0
Author-Name: Gábor Orbán
Author-X-Name-First: Gábor
Author-X-Name-Last: Orbán
Author-Email: orbang@mnb.hu
Author-Workplace-Name: Magyar Nemzeti Bank
Author-Name: György Szapáry
Author-X-Name-First: György
Author-X-Name-Last: Szapáry
Author-Email: szaparygy@mnb.hu
Author-Workplace-Name: Magyar Nemzeti Bank

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

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. 

Length: 38 pages
Creation-Date: 2004
File-URL: http://www.mnb.hu/letoltes/wp2004-4vvvv.pdf
File-Format: Application/pdf

Number: 2004/4
Classification-JEL: E61, H6, H87.
Keywords: EU enlargement, fiscal policy, fiscal rules, Stability and Growth Pact.
Handle: RePEc:mnb:wpaper:2004/4