Macroeconomic Policy and Institutions During the Transition to European Union Membership

26 Pages Posted: 21 Sep 2000 Last revised: 21 Jan 2002

See all articles by William H. Branson

William H. Branson

Princeton University - Woodrow Wilson School of Public and International Affairs; National Bureau of Economic Research (NBER)

Jorge Braga de Macedo

New University of Lisbon - Faculty of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Jürgen von Hagen

University of Bonn - Institute of Economic Policy; Centre for Economic Policy Research (CEPR)

Date Written: May 1998

Abstract

A framework is developed for macroeconomic policy analysis in four countries of Central Europe (CE) in transition to EU membership (Czech Republic, Hungary, Poland, and Slovakia). A Multi-Annual Fiscal Adjustment Strategy (MAFAS) and a Pre-Pegging Exchange Rate Regime (PPERR) appropriate for maintaining internal and external balance are described and evidence on budgetary procedures is presented, in comparison with those prevailing in EU member states. The comparison suggests that the four CE countries are better fit for fiscal stabilization than Greece, Spain and Portugal were in the 1970s. Nevertheless, there is still much room for institutional improvement. A stronger commitment mechanism to fiscal targets at the preparatory stage would improve fiscal performance in all four countries. The adoption of a kind of convergence program would also be made easier if some group procedures can be adopted among them. The four countries also appear to have moved closer to sustainability in their external and internal balance in the last few years so that a MAFAS and a PPERR become credible. The fact that they established CEFTA (which Slovenia since joined) also helps set them apart from other EU associates in the region.

Suggested Citation

Branson, William H. and Braga de Macedo, Jorge and von Hagen, Jürgen, Macroeconomic Policy and Institutions During the Transition to European Union Membership (May 1998). NBER Working Paper No. w6555. Available at SSRN: https://ssrn.com/abstract=226288

William H. Branson

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

409 Robertson Hall
Princeton, NJ 08544-1021
United States
609-258-4828 (Phone)
609-258-5533 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jorge Braga de Macedo

New University of Lisbon - Faculty of Economics ( email )

Campus de Campolide
Lisboa, 1099-032
Portugal

HOME PAGE: http://www.fe.unl.pt/~jbmacedo/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Jürgen Von Hagen (Contact Author)

University of Bonn - Institute of Economic Policy ( email )

Adenauerallee 24
D-53113 Bonn
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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