The European Semester and Parliamentary Oversight Institutions Inside and Outside of the Euro Area

The European Semester is a challenge for national parliaments but also an opportunity to reform domestic oversight institutions. Drawing on data from all member states, this study examines the conditions under which national parliaments use this opportunity. Is Euro area membership a prerequisite for parliamentary adaptation to the European Semester and, if so, which further combinations of conditions account for variation among Euro area countries? The analysis suggests that membership in or close ties with the Euro area and institutional strength constitute <em>necessary conditions</em> for parliamentary adaptation. Combined with other factors—in particular, public debt exceeding the Maastricht criteria—these conditions explain reform in many cases. National parliamentary adaptation to the European Semester thus follows existing institutional divisions constituted by differentiated integration in the Euro area and uneven national parliamentary strength.

STABILITY OF FISCAL REVENUES IN EU: WHAT TO TAX?

Certain and predictable tax revenues are desirable by states to run fiscal policy smoothly and minimize any negative effects of business cycles. Over the last decades sizes of government budgets in most EU Member States have experienced rather small transformations. However, particular kinds of taxes contribute to that stability to different extent. Although, this matter is important from the perspective of state budget, it has not been analysed thoroughly before – especially in EU. Based on statistical analysis of macroeconomic data I calculated that revenues from payroll taxes feature especially low variability and positively influence the budget constancy. Changes over time are slightly bigger for taxes imposed on production. Inflows from taxation of income of corporations are particularly unstable. These findings may support policymakers in appropriate budget revenues design. Expansionary fiscal policy is believed to boost economic growth ( (Aschauer, 1989), (Munnell, 1990)). Public investments are traditionally believed to support long-term growth of economies (Barro, Government Spending in a Simple Model of Endogenous, 1990). On the other hand low taxes should support development of economy as well ((Engen & Skinner, 1992), (Daveri & Tabellini, 2000), (Karras & Furceri, 2009), (Padovano & Galli, 2001) or (Lee & Gordon, 2005) to mention only selected research). For example Romer and Romer estimated that a 1% increase in taxation relative to GDP induces reduced output of up to 3% over the following three years (Romer & Romer, 2007). Mountford and Uhling claimed that tax cuts - even if financed from budget deficit – are most effective from the perspective of economy growth (Mountford & Uhlig, 2008). Blanchard and Perotti found that tax shocks affect investment, consumption and output (Blanchard & Perotti, 2002). However, some empirical analysis failed to confirm significance of the relation between GDP and tax rates ((Easterly & Rebelo, 1993), (Mendoza, Milesi-Ferretti, & Asea, 1997)). The correlation between the level of the tax rate and output was found to be indeed negative but sometimes non-existing. These results are in line with common sense. However, in the long run high public spending cannot be combined with low taxes (assuming that low taxes transfer into smaller budget revenues). High public deficits, which may arise in consequence of expansionary fiscal policy, are eventually harmful for economic growth in the long-run. Therefore, satisfactory inflows from taxes are desirable. Maintaining balanced budgets is a typical objective of several world economies. Yet this requirement seems key for European Monetary Union states, which use single currency and hence lead common monetary policy [1]. To improve economic stability of those countries and to provide for at least impeded policy-mix tools, certain requirements related to fiscal policy were imposed on them. According to the so called Convergence Criteria (also known as Maastricht Criteria)(i) the ratio of the annual government deficit to GDP must not exceed 3 percent and (ii) the ratio of government debt to GDP must not exceed 60 percent. However, several Member States are struggling against high budget deficits which are followed by excessive public debts. Most EU Member States have been returning to balance over last years and in 2017 almost half of them recorded government surplus. However, the budget deficit for the EU as a whole is still substantial and in 2017 amounted to 81.6% of its GDP. This is far more than before the crisis in 2007 when a figure of 57.5% of GDP was recorded. Moreover, although from peak in 2014 general government debt decreased on average in a number of Member States, still in 2017 as much as 12 out of 19 eurozone countries bound by the Maastricht criteria recorded debt above required level of 60% of local GDP. Identification of reliable sources of state revenues may provide a useful tool to cope with that issues.

An Assessment of the Public Financial Indicators with Budget Data in Turkey: Review post- 2000

There have been changes in public financial indicators in Turkey after the year of 2000. In this paper, these changes were evaluated together with the budget data. In this context, this paper aims to reveal positive or negative effects of budget data on public financial indicators. The 2008 global financial crisis formed the external direction of the negativity in public financial indicators. In particular, before and after 2008, negative developments have been experienced in public financial indicators except for some years. The 2008 global financial economic crisis had also negative impacts on public financial indicators. Moreover, both general and local elections are a negative factor in public spending discipline in Turkey. Since the local elections, the ruling government has chosen extender budget policies as fiscal policies to win the elections. According to the findings of this study, it was determined that Turkey moved away from the Maastricht criteria after 2008, which stemmed from negative developments in budget data.

Determinants and implications of the eurozone enlargement

To join the Eurozone (EZ), a candidate country has to fulfil five nominal Maastricht convergence criteria and ensure compliance of national legislation with the acquis communautaire. With this regard special difficulties pose the fiscal criterion relating to the maximum allowed budget deficit of 3 per cent of GDP. If it is not met, the European Commission launches the Excessive Deficit Procedure. Currently, such formula applies to France, Spain and the United Kingdom. Although the issue is not absolutely certain, one can assume that euro will weather the present difficulties and will come out stronger, though the economically unjustified Euro scepticism of some countries is not helping. It may be expected that in the 2020s the European Monetary Union will be joined by all countries that are still using their national currencies and that the EU will be extended to include new member states, enlarging the euro area further. In this article authors are discussing the issue whether Poland will join the EZ in the coming years, considering the challenges of meeting all Maastricht criteria, on the one hand, and the reluctance of the government to give up the national currency, on the other. A mixed method combining the results of qualitative and quantitative research has been used to empirically verify the research question presented.

Structure of Household Expenditures in Slovakia and Relations Between its Categories

Household income is one of the basic indicators of the living standard of population in countries or regions. The income indicator is inextricably linked to the household expenditure indicator, whose structure also indicates the living standards of households. The development of income and expenditures of Slovak households has been affected by many events over the last decades (fulfilment of the Maastricht criteria, accession of the Slovak Republic to the EU, adoption of the euro currency, economic crisis). The category of gross cash expenditures, net cash expenditures or consumption expenditures may be used to assess household expenditures. Based on the classification by individual consumption by purpose (COICOP), the expenditures are divided into 12 basic categories. The development of individual categories of expenditures, however, should be analysed separately as there is no long-term balanced relationship between them.

“EURO SUSTAINABILITY”: FIVE POLICY PROPOSALS TO MAKE THE EURO SUSTAINABLE FOR THE EUROPEAN ECONOMY

The provided economic analysis and the economic policy proposed in this article are the natural verifications and continuations of a research that was started with the author’s described theory in Single Currency, Economic Development and Local Economies. A Critical Analysis of the Economic Policy of the Euro (1998). He emphasized the presence of important critical factors on the Economic and Monetary Union (EMU) which, if not solved, would undermine its existence; however, the importance of EMU’s policy was not questioned. This article offers a sustainability strategy of the Euro, called a “push investment approach,” which provides complementary public and private investment, strengthens the euro area governance and gradually eliminates the Maastricht criteria. Furthermore, the policy makes the Euro sustainable for all the acceding countries, constitutes development as well as the competitive factor and it is not critical to enterprises.

Testing for Inflation Convergence Among European Union Countries: A Panel Approach

This paper attempts to test for inflation convergence in a sample of 24 European Union countries. To tackle this issue, first- and second-generation panel unit root and stationarity tests are employed so as to provide evidence of inflation convergence before and after the launch of the single currency, the euro. We also test for and then allow for cross-sectional dependence. In general, the findings reveal that conditional inflation convergence exists for all panels under study. The estimation of half lives shows that the evidence for faster speed of convergence applies for the new member states followed by the core countries and the old member states. JEL classifications: C33, E3, F33 Keywords: Inflation Convergence, EU, Maastricht Criteria, Panel data

Economic Analysis of Turkey and European Countries Before and After the Syrian War

Undoubtedly, a war in a country is a great destruction for its citizens. The Syrians have had to take refuge in other countries because of their vital problems. European countries have adopted a rigid attitude towards refugees to protect themselves. How did the refugee mobility, arising from internal conflicts in Syria and embodying different qualities within its constitution, affect European countries due to global economic relations? Or did Europe continue its economic development without being negatively affected by the geographically distant war? On the other side, to what extent has Turkey been able to protect itself economically? Can Turkey continue their progress towards the EU? This work investigating answers to these questions is based on the Maastricht criteria set to ensure economic integration at an advanced level among EU countries. The data related to these criteria cover 6 annual data of pre and post of the war. In the analysis, countries are ranked and evaluated with the flows of criteria, using PROMETHEE method. The result of the analysis shows that generally there is a decrease, in comparison, in the net flows of the second period. This implies that countries are not in better situation compared to the first period which covered 2008 financial crisis. In other words, the EU may likely remain behind of its economic and fiscal targets.

European handling of implicit and explicit government debt as an obstacle to the funding-type pension reforms

In light of an analysis of Hungarian experience and as a result of the lessons that can be learned from it, I show in this article that the terms of the Stability and Growth Pact (SGP, the so-called ‘Maastricht criteria’) are barriers to a desirable reform of pay-as-you-go (PAYG) type pension systems. Following on from this, a proposal to modify these criteria so that this problem is eliminated is presented. The main problem with the SGP is that it only deals with explicit government debt and ignores implicit debt. Although it renders reforms politically palatable, it will increase overall debt in the curse of reducing the explicit one. I also review the rationale and possible types of funding of pension systems and propose a simple model for identifying the likely time-span of the transition from a PAYG system into a fully funded one.