Macroeconomic Policies for EU Accession

Macroeconomic Policies for EU Accession

Edited by Erdem Başçı, Sübidey Togan and Jürgen von Hagen

What macroeconomic requirements must Turkey meet in its quest to accede to the European Union? This book, with its distinguished contributors – well-known economists and policymakers – examines and analyses these macroeconomic challenges confronting Turkey. Although the focus is on the specific situation of Turkey, the lessons are informative for other candidate countries and the findings directly relevant to the process of European integration.

Comments

Taner M. Yiğit

Subjects: economics and finance, financial economics and regulation

Extract

Taner M. Yig it ˘ In analysing the sustainability of EU fiscal policies, the author does a very good job in balancing the EU political structure and its economic consequences. In his study on the EU-15, he initially focuses on the structure of fiscal policy coordination mechanisms in the EU to find that the monitoring of fiscal prudence became much politicized, and that the larger countries with more political power tend to be less disciplined in their fiscal policies. He later conducts empirical tests, showing that (i) the likelihood of consolidation increases with debt ratio, that is, countries with larger initial debt burdens are more disciplined in their fiscal policies; (ii) the countries joining the EMU fall into a consolidation fatigue, noticeably relaxing their fiscal policies; and finally (iii) using growth accounting one can calculate the fiscal impulses that are independent of growth in the EU-15, illustrating that large fiscal impulses occur in election years. Following his diagnostic analysis, he continues with several recommendations toward both the improvement and better evaluation of fiscal performance in the European Union. The first of these is the possibility of conflicts between the long and short-run targets, necessitating that the members should reconsider the balance between optimal and sustainable policies and not just concentrate on yearly debt or deficit ratios. Secondly, the author notes that rather than simply looking at the ratios, policymakers should dissect them into their components, namely growth and debt (or deficit) to separate out growth-promoting policies from political...

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