Price and output level convergence between new member states and the existing EU necessarily implies inflation and growth divergence for many years to come. That complicates the conditions for accession to the euro. In this Paper, we focus on debt dynamics for the eight new member states from...

The effectiveness of cyclically adjusted balances (CABs) as an indicator of the health of public finances depends on the accuracy with which cyclically adjusted figures can be calculated in real time. This paper measures the accuracy of such figures using a specially constructed real time data...

This paper examines the potential consequences of imposing a ‘stability pact’ on the fiscal convergence criteria for monetary union. Various versions of the stability pact are possible. We examine the consequences of reducing the target deficit ratio to 1% and of refundable fines for those...

Of all the institutional arrangements for monetary union in Europe, the fiscal convergence criteria have proved the most difficult to achieve and the most controversial because of their presumed deflationary impact on economies already suffering high unemployment. This paper examines what fiscal...

The European crisis has highlighted the role of intra-European payments imbalances for the survival of the EMU. Payment imbalances between the North and the South have contributed to the accumulation of large stock of foreign debt, while flows of foreign capital ceased to finance productive...