Title: Macroeconomic dynamics in four selected new member states of the EU

Authors: Pasquale Foresti; Ugo Marani; Giuseppe Piroli

Addresses: European Institute, The London School of Economics and Political Science, Houghton Street, London WC2 2AE, UK ' Department of Economics, Management, Institutions, Federico II University of Naples, Via Cinthia, 80126, Naples, Italy ' Department of Economics and Statistics, Federico II University of Naples, Via Cinthia, 80126, Naples, Italy; Economics and Econometrics Research Institute (EERI), Avenue de Beaulieu, 1160, Brussels, Belgium

Abstract: In this paper, we employ a block structured near-vector autoregression in order to compare the reactions to euro area shocks in four new member states (Bulgaria, Hungary, Czech Republic and Romania) and in the old member states of the EU. The methodology adopted also allows us to study the effects of national economic policies and their reactions to national shocks in each new member state. Our analysis demonstrates that possible asymmetric effects of the ECB's monetary policy cannot be excluded and that the potential accession of the new member states may increase the level of fiscal indiscipline in the Eurozone.

Keywords: European Monetary Union; monetary policy; fiscal policy; policy interaction; asymmetric shocks; EMU enlargement; fiscal discipline; Bulgaria; Hungary; Czech Republic; Romania; national policies; economic policies; national shocks; fiscal indiscipline; Eurozone.

DOI: 10.1504/IJEPEE.2015.068247

International Journal of Economic Policy in Emerging Economies, 2015 Vol.8 No.1, pp.40 - 51

Available online: 26 Mar 2015 *

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