Are the New Member States Ready to Join the Euro Area? A Business Cycle Perspective
Are the New Member States Ready to Join the Euro Area? A Business Cycle Perspective

Summary/Abstract: The present research employs a vector autoregression (VAR) approach to assess the degree of business cycle synchronization between the new member states (NMS), which have not adopted the single European currency, and the Euro area (EA). The main fiscal and monetary factors affecting the business cycle coordination between the NMS and the EA have been identified. The causality between the business cycle convergence of the NMS and the EA and the implemented fiscal and monetary policies has been investigated in the short and in the long term. Recommendations and conclusions on the readiness of the NMS to join the EA have been made.

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