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An Analysis Of The Fiscal Convergence Criteria In The European Union In Terms Of The Sustainability

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  • Iulia Andreea Bucur
  • Simona Elena Dragomirescu

Abstract

Although the convergence criteria in the Maastricht Treaty led to the creation of the EMU and the euro area has resisted more than some of its critics believed, in the context of major macroeconomic imbalances, the issue of nominal convergence has been the subject of numerous research. This paper aims to analyze the capacity of fiscal criteria to reflect the ability of EU Member States to achieve economic development for the integration in the EMU and to comply strict fiscal policy that governing its operation. In the context of certain technical deficiencies of fiscal criteria, we analyzed the developments of budget deficit and gross public debt in the EU during 2000 and 2012. The results show that until 2007 the EU economies were able, overall, to meet the budget deficit criteria, but due to the financial crisis and the prolonged slowdown in economic growth, the fiscal balance had an unfavorable evolution since 2008, while the evolution of the gross public debt has worsened increasingly. Due to this pressure situation on the sustainability of public finances, examining the adoption, application and enforcement of the fiscal policy rules expressed by the evolution of the Fiscal Rule Index for the period 2000-2011, the importance of rules in the fiscal management of the Union and especially of the euro area appears increasingly obvious.

Suggested Citation

  • Iulia Andreea Bucur & Simona Elena Dragomirescu, 2013. "An Analysis Of The Fiscal Convergence Criteria In The European Union In Terms Of The Sustainability," Studies and Scientific Researches. Economics Edition, "Vasile Alecsandri" University of Bacau, Faculty of Economic Sciences, issue 18.
    • Handle: RePEc:bac:fsecub:13-18-17
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    References listed on IDEAS

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    1. Iulia Andreea Bucur & Mircea Muntean, 2014. "An Overview Of Fiscal Consolidation Process In The European Union," Studies and Scientific Researches. Economics Edition, "Vasile Alecsandri" University of Bacau, Faculty of Economic Sciences, issue 20.

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    More about this item

    Keywords

    European Union; Euro Area; convergence criteria; fiscal deficit; gross public debt; fiscal policy; Stability and Growth Pact; sustainability; Fiscal Rule Index;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F15 - International Economics - - Trade - - - Economic Integration
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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