May 5, 2004 Gábor Orbán - György Szapáry present a paper in Hungarian language: The Stability and Growth Pact form the Perspective of the New Member States

May 5, 2004  Gábor Orbán - György Szapáry: The Stability and Growth Pact form the Perspective of the New Member States

Abstract

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

May 5. 2004 MNB, Visitor Centre(in Hungarian language)

The purpose of this paper is to examine the fiscal characteristics of the new members in the light of the criticisms levelled against the SGP 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. There are substantial differences in the starting fiscal position of the new members. 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. Some of the policy implications of these findings are discussed.

Paper

Contact: Gábor Orbán

orbang@mnb.hu