External Publication

EU economic governance: euro area periphery lessons for Central and Eastern European countries

An analysis of macroecnomic developments shows that Central and Eastern European (CEE) EU member states fared much better in the aftermath of the crisis compared to euro-area periphery countries. Furthermore, they have a better chance to avoid the problems that the euro-periphery countries faced before the crisis.

By: Date: December 9, 2016 Topic: European Macroeconomics & Governance

EU economic governance: euro area periphery lessons for Central and Eastern European countries was published as a chapter in the book Boosting European Competitiveness:The Role of CESEE Countries edited by Marek Belka, Ewald Nowotny, Pawel Samecki and Doris Ritzberger-Grünwald and published by Edward Elgar Publishing.

In the chapter EU economic governance: euro area periphery lessons for Central and Eastern European countries, Zsolt Darvas draws parallels between the macroeconomic developments of the euro-area periphery and Central and Eastern European (CEE) EU member states. Despite several notable similar features in the period preceding the global and European financial crises, CEE member states fared much better in the aftermath of the crisis.

The chapter then assesses the role played by the European economic governance in striving for good policies. It concludes that the European economic governance failed before the crisis and while the new framework has improved significantly, it has been rather ineffective so far.

The most promising new element is the establishment of the national competitiveness authorities, which can improve the diagnosis of possible competitiveness problems and can help to identify remedies, even though it is unlikely that their network will help to better internalise cross-country spill-over effects.

Finally, the chapter concludes that once they join the euro, CEE countries have a better chance to avoid the problems that the euro-periphery countries faced in the pre-crisis period. A good example is Slovakia, a country that is thriving within the euro area, despite the fact that it joined the euro perhaps at the worst possible time, shortly after the late-2008 collapse of Lehman Brothers.

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