Evaluating the Maastricht Convergence Criteria for New Prospective European Union Members

This paper aims to assess the macroeconomic condition of the four new prospective members, which are Turkey, Croatia, Bulgaria, and Romania, depending on four Maastricht Convergence Criteria in order to determine which candidate is ready to join EMU. We use cointegration approach to analyze cointegrating relations among inflation rates, interest rate, deficit-to-GDP, and debt-to-GDP ratios of four candidates in relation to Germany. Bounds Testing and Engle-Granger Cointegration Approach are applied to all criteria to test convergence. None of the convergence criteria for Turkey and Romania in relation to Germany has been achieved. On the other hand, there is evidence of nominal convergence between Croatia and Germany in terms of deficit-to-GDP ratio and interest rates. Also, there is cointegration between deficit-to-GDP ratio of Bulgaria and that of Germany.