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Models for Stability and Growth, Structural Reforms, Conditionality, and EU Surveillance Criteria

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Name of the Asset | Models for Stability and Growth, Structural Reforms, Conditionality, and EU Surveillance Criteria
Type of Asset | Working Paper
Date | December 2011

Summary

This review paper represents the policy part of a report on financial risks in Southeast Europe. It aims to propose a set of surveillance mechanisms and criteria that European Union (EU) could use to assess the stability and sustainability of economic progress of the Future Member States (FMS). The objective is to identify financial risks and vulnerabilities, and also to determine the objects, goals, or targets that the monitoring of indicators of vulnerability should aim at.

To this end, the frameworks of the International Financial Institutions (IFI: primarily the International Monetary Fund, IMF, and the World Bank) are analyzed. The key deficiency of the EU policy framework was found to be that it lacks short term stabilization policy model and instruments for adjustment, such as the IMF. It also lacks an appropriate model for investment support, though not necessarily the funds. The paper suggests an alternative framework for the EU‘s engagement with the FMS, by discussing a set of surveillance criteria that the EU may want to adopt. It recommends a need to be flexible about the choice and weight of widely used standard indicators in the overall judgment that is made on the basis of them all taken together, and also that they should be supplemented by the short-term indicators used by the IMF.

Authors | Vladimir Gligorov
Country and/or Region | European Union
Name of the Program | Regional Research Competition
Funder(s) |  Jubiläumsfonds of the Austrian National Bank (OeNB) and the Austrian Ministry of Finance

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