Fiscal convergence in monetary union : are the new member countries better disciplined than Eurozone members?

Abstract

The analysis uses the Maastricht fiscal criteria as well as alternative fiscal measures to empirically examine the fiscal discipline of the recent ten European Union (EU) members with respect to the EU15.The results suggest poor fiscal discipline in the Union in general. More importantly, the new members are found as undisciplined as EU15, if not more.

The results suggest that monetary unions may not provide strong fiscal discipline for its new members.

Keywords

• monetary union
• fiscal discipline
• Eurozone members