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Fiscal Foundation of Convergence to European Union in Pre-Accession Transition Countries


  • Halpern, László
  • Neményi, Judit


Pre-Accession Transition Countries (PATCs) aim at early admittance to the monetary club. Their fiscal indicators – deficit and debt - do not show any serious symptoms. Closer scrutiny reveals, however, that the interest burden of their public debt might be underestimated, and that restructuring and unavoidable fiscal transparency may increase their debt significantly. All in all about 1 per cent primary surplus might be sufficient to remain on the safe side of their debt in the medium run. According to the estimated model the fiscal adjustment is driven by the external imbalance, the monetary conditions are determined by the fiscal stress and their growth is affected by fiscal and monetary stimuli.

Suggested Citation

  • Halpern, László & Neményi, Judit, 2002. "Fiscal Foundation of Convergence to European Union in Pre-Accession Transition Countries," Discussion Paper Series 1: Economic Studies 2002,03, Deutsche Bundesbank.
  • Handle: RePEc:zbw:bubdp1:4168

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    References listed on IDEAS

    1. Sebastian Edwards, 2001. "Capital Mobility and Economic Performance: Are Emerging Economies Different?," NBER Working Papers 8076, National Bureau of Economic Research, Inc.
    2. Buch, Claudia M. & Piazolo, Daniel, 2001. "Capital and trade flows in Europe and the impact of enlargement," Economic Systems, Elsevier, vol. 25(3), pages 183-214, September.
    3. Fernandez-Arias, Eduardo, 1996. "The new wave of private capital inflows: Push or pull?," Journal of Development Economics, Elsevier, vol. 48(2), pages 389-418, March.
    4. Buch, Claudia M. & Lusinyan, Lusine, 2003. "Determinants of short-term debt: a note," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 13(2), pages 157-170, April.
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    Cited by:

    1. Erdem Basci & M. Fatih Ekinci & Murat Yulek, 2007. "On Fixed and Variable Fiscal Surplus Rules," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 43(3), pages 5-15, June.
    2. Dalia Grigonyté, 2003. "Impact of Currency Boards on Fiscal Policy in Central and Eastern European Countries," Economic Change and Restructuring, Springer, vol. 36(2), pages 111-133, June.
    3. I.S. Meister, 2002. "Is Eastern Europe ready for the Euro? A Cointegration Analysis for the Maastricht Criteria," WO Research Memoranda (discontinued) 699, Netherlands Central Bank, Research Department.

    More about this item


    fiscal adjustment; monetary conditions; EU integration of transition countries;

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy


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