Fiscal convergence in the European Union

Abstract

We empirically examine the fiscal convergence of the recent ten European Union (EU) members using the Maastricht fiscal convergence criteria. We test for absolute beta and sigma convergence of the new members in comparison to the Maastricht benchmarks, as well as the EU15 figures, using methodologies that allow for structural breaks. The results show poor fiscal performance in the European Union in general, suggesting that monetary unions do not necessarily encourage fiscal convergence for its members. © 2008 Elsevier Inc. All rights reserved.