In this paper we argue that strong political economy forces explain the rush of the EU to expand eastwards. We use a model of vertical product differentiation in order to claim that technologically-advanced EU firms (residing in high-income member countries) prefer a mutual market-opening with...

This paper explores the economic consequences of the enlargement of the European Union with countries from Central and Eastern Europe. We focus on integration aspects that go beyond the reduction of formal trade barriers, namely accession to the internal market and free movement of labour. The...

The paper develops a unified general equilibrium model including savings with overlapping generations, investment and search unemployment. Long-run analytical results for the small open economy identify capital accumulation as a prime transmission channel. The effects of integration on...

By the Treaty of Accession to the EU, Romania opted for the euro adoption. According to the Maastricht Treaty, since 2014 Romania has fulfilled the nominal convergence criteria, thus becoming apt to adopt the euro. But a careful analysis of the reality and the lessons learnt from the Euro Area...

We propose using a simple Taylor rule to evaluate business cycle convergence of the Czech Republic, Hungary, and Poland with the Eurozone. Our findings indicate an ongoing convergence of those CEE countries to the Eurozone, but with instabilities and heterogeneity between the countries....

We discuss past performance and future challenges for the countries of Central and Eastern Europe (CEE). We highlight the successful convergence process of those countries, not least thanks to their integration into European and global value chains. As the external environment changes, so...

The continuous enlargement of the European Union (EU) has been one of its greatest achievements and judging by the increasing number of EU member countries, one of its most successful policies. This primer considers the economic side of enlargement for the ‘new' EU members, and provides data...

We evaluate potential costs and benefits of Eastern enlargement of the EU. In addressing fiscal costs of enlargement in addition to tariff and nontariff barriers, we arrive at important conclusions: 1) Overall, extending EU membership to Eastern applicants is more than worth its price for...

By looking at imports of Eastern European countries we provide novel insights on the importance and magnitude of border effects and on how they are linked with technical barriers to trade. All CEECs traded with themselves more than with other countries. We grouped products into three categories;...

Limitations placed on the movement of labor are seen as major impediments to the growth both of trade in services and of the economy overall. The temporary movement of service providers is generally expected to be less politically sensitive than the permanent movement of labor. Therefore, it...