01fa macroeconomie

8/12/2019 01fa macroeconomie

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Economy Transdisciplinarity Cognition

www.ugb.ro/etc

Vol. 15,

Issue 1/2012

1!21

An Analysis Regarding the Fulfilment of the Nominal Convergence Criteriain the New Member States of the European Union in the Contet of the

Current Financial Crisis

Alina !eorgeta A"#"NC$, Camelia M"#EA% Floarea "&R'AC(EFinancial and Monetary Research Center )*ictor Sl+vescu,% -ucharest% R&MAN"A

[email protected],

[email protected]

Abstract.Reaching a sustainable level of nominal convergence is a requirement for all newEuropean Union Member States (NMS) in the process of euro adoption, without it being

impossible to oin the euro area! "he increased importance of nominal convergence, together

with an advanced level of real convergence, seem to be for the European Union institutions,

including the European #entral $an% (E#$), a necessar& and sufficient guarantee forentering into the European Monetar& Union (EMU) without an& additional subsequent

problems! 'owever, it is not clear the manner in which a countr& is or is not selected for

entering into the EMU, the decisionma%ing process being insufficientl& transparent, some

countries have been unprepared from the economical point of view, but have been accepted

(e!g! reece), while others have been reected due to a lac% of credible and sustainable

convergence of some criteria (e!g! *ithuania)! "hus, this article proposes an anal&sis of the

fulfillment of the nominal convergence criteria through a personal methodolog& presented in

other previous studies! +t aims at facilitating the understanding of the etent to which the NMS

are convergent in the contet of the current economic and financial crisis!

"he article does not propose an ehaustive treatment of the subect, but it can be a good

starting point for the evaluation of the European Union old Member States- (.MS) nominal

convergence, especiall& since in these countries it currentl& occurs a public debt crisis (e!g!

reece, +tal&, Spain)!/eywords.Nominal convergence, new Member States, European integration!

Introduction

In order to ac"ie#e $ull integration into t"e European %nion, &oining t"e euro area re'uires

simultaneous $ul$illment o$ t"e minimum economic criteria (nown as t"e nominal criteria o$

con#ergence or criteria o$ nominal con#ergence. T"us, t"e new )ember *tates, a$ter periodic

e#aluations in t"e $orm o$ con#ergence programs, must pro#e to European institutions and to ot"ers

member states, a proper per$ormance o$ macroeconomic parameters in order to &oin t"e euro area,

w"ic" was considered not long time ago e+tremely e+clusi#e.

T"e global economic and $inancial crisis "as a$$ected se#eral aspects o$ t"e euro area t"ere$ore a

'ualitati#e analysis o$ t"e progress towards $ul$illing nominal con#ergence criteria in t"e new )ember

*tates, in relation to t"e ob&ecti#es imposed by t"e ad"esion to t"e t"ird stage o$ t"e European)onetary %nion, is e+tremely interesting in t"e current conte+t. -lso, in t"is period still ruled by

uncertainties, ris(s and concerns about t"e $uture o$ t"e euro area, an analysis o$ t"e nominal

con#ergence criteria $ul$illment by t"e old )ember *tates )* o$ t"e E% could be e+tremely

rele#ant, but t"is study currently is not wit"in t"e scope o$ our researc".

Methodology and Study Reasults

%sing t"e data $rom t"e Con#ergence eport o$ t"e European Central 3an( EC3 $rom )ay 2010, we

reali4e, based on a met"odology presented in a pre#ious study 16, an assessment o$ a global inde+ o$

con#ergence, in order to allow a better comparati#e analysis o$ t"e nominal con#ergence indicators

$rom 7)*.

T"e 'ualitati#e $raming used in t"is article describe t"e assessment 8parameters8 o$ t"e nominalcon#ergence criteria, based on t"e nominal con#ergence criteria already establis"ed by t"e European

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%nion, wit"out attempting to re#ise t"em met"odologically. T"us, based on t"e in$ormation pro#ided

by t"e EC3s Con#ergence eport $rom )ay 2010, we use a set o$ relati#e indices o$ nominal

con#ergence t"at we will en$rame into scales o$ intensity 8di#ergent8, 8"ig"ly di#ergent8,

8con#ergent8, 8"ig"ly con#ergent8 and 8optimal8, in order to notice easier bot" t"e possible o#erruns

o$ t"e limits and also t"e "ierarc"y o$ 7)* in t"e con#ergence process.

9e de#elop indices o$ nominal con#ergence $or eac" nominal con#ergence criterion, t"ey representingt"e #alues recorded by t"e 7)* di#ided by t"e re$erence #alues pro#ided by t"e EC3 $or t"e periods

c"osen $or e#aluation.

*peci$ically, t"e inde+ o$ price stability $or t"e in$lation measured by t"e :IC; :armoni4ed Inde+ o$

Consumer ;rices is IHIPC= xikyk, w"ere< xikis t"e #alue o$ t"e a#erage annual percentage c"ange o$

in$lation, i reports to t"e country assessed in period k, namely during t"e period -pril!)arc" o$ t"e

years 200=!2010, and ykis t"e re$erence #alue, w"ic" applies to t"e period k! namely -pril!)arc" o$

t"e years between 200=!2010, $or :IC; in$lation.

T"e inde+ on long!term interest rate according to t"e )aastric"t criterion is IM"#IR = miknk w"ere mikis t"e #alue o$ t"e a#erage annual percentage c"anges o$ t"e long!term interest rate, and i reportsto t"e

country assessed in t"e period k, namely during t"e period -pril!)arc" o$ t"e years 200=!2010. nkist"e re$erence #alue $or t"e interest rate, w"ic" applies to t"e period k!-pril!)arc" o$ t"e years in t"e

period 200=!2010, according to t"e interest rate criterion.

T"e inde+ o$ t"e go#ernment de$icit or surplus, I$%& = siktk, re$lects t"e weig"t sik w"ereireports to t"e

country assessed and kto t"e entire calendar year, in t"e period 200>!2010, namely t"e surplus or

de$icit o$ t"e go#ernment budgetary position as percentage o$ ?@;, in tkt"e re$erence #alue o$ !AB

o$ ?@;. T"e inde+ o$ gross public debt is I$P%= uik'k, w"ere uikis t"e debt o$ icountry in t"e period k

years in t"e period 200>!2010(!and'kis t"e re$erence #alue $or debt, w"ic" is o$ 0B o$ ?@;.

Dor e#aluation, we use t"e $ollowing table 12.0 1.> 1.1 7o 0.0 5.

200H 2.5 !A.H 1.> 7o 0.0 =.2

2010 1.= !2.> 1=. 7o 0.0 .H

Romania

200> =.H !5. 1A.A 7o !10. =.=

200H 5. !>.A 2A.= 7o !15.1 H.=2010 5.0 !>.0 A0.5 7o 2.H H.

C0ech

Re-u*lic

200> .A !2.= A0.0 7o 10.2 .

200H 0. !5.H A5. 7o !.0 .>

2010 0.A !5.= AH.> 7o 2. .=

&stonia

200> 10. !2.= . es 0.0 ...

200H 0.2 !1.= =.2 es 0.0 ...

2010 !0.= !2. H. es 0.0 ...

"at'ia

200> 15.A !.1 1H.5 es !0. .

200H A.A !H.0 A.1 es !0. 12.

2010 0.1 !>. >.5 es !0. 12.=

"ithuania

200> 11.1 !A.A 15. es 0.0 5.

200H .2 !>.H 2H.A es 0.0 1.02010 2.0 !>. A>. es 0.0 12.1

Hungary 200> .0 !A.> =2.H 7o !0.1 >.2

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200H .0 !.0 =>.A 7o !11.5 H.1

2010 .> !.1 =>.H 7o .5 >.

Poland

200> .2 !A.= =.2 7o =.2 .1

200H .0 !=.1 51.0 7o !2A.2 .1

2010 A.H !=.A 5A.H 7o >. .1

Re)erence

'alue7

-pril

200=J)arc"

200>=

A.2B !AB 0B ! /!15B .5B

-pril

200>!)arc"

200H=

.0B !AB 0B ! /!15B 5.>B

-pril

200H!)arc"

2010=

1.0B !AB 0B ! /!15B .0B

Source.European #ommission (Eurostat) and E#$, Ma& /010 #onvergence Report!

#egend2 1! 3verage annual percentage change! 4ata for /010 refer to the period 3pril /005March /010!/! 3s percentage of 46! 4ata for /010 are ta%en from European #ommission spring /010 forecasts!7!+nformation for /010 refers to the period until the cutoff date for statistics (/7 3pril /010)!8! 3verage annual percentage change! 4ata for /010 are calculated as a percentage change of the average over

the period 1 9anuar& /010 /7 3pril /010 compared with the average of /005! 3 positive (negative) number

denotes an appreciation (depreciation) vis:vis euro!

;!3verage annual interest rate! 4ata for /010 refer to the period 3pril /005March /010!! 3uthors- calculations for /005 reference value! "he reference values refer to the period 3pril ? March from

/00>/010 period for the '+#6 inflation and longterm interest rates from the E#$ #onvergence Reports for

the &ears /00@ and /010!

T"e result obtained a$ter re$inement are s"own in t"e $ollowing table .=> 1.A= 0.AA 0.H>

200H 0.>A A.00 0.0 2.1

2010 0.10 2.>= 0.>1 2.12

"ithuania

200> A.= 1.10 0.2 0.>

200H 1.05 2.H= 0.H 2.1

2010 2.00 2.>0 0. 2.02

Hungary 200> 1.>> 1.2= 1.22 1.2200H 1.00 1.AA 1.A1 1.5=

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2010 .>0 1.A= 1.A2 1.0

Poland

200> 1.A1 1.2A 0.=H 0.H

200H 1.00 2.A= 0.>5 1.05

2010 A.H0 2.A 0.H0 1.02

Source. author-s calculations

;lease remember t"at in a pre#ious study 16 we suggest $or e#aluation o$ eac" criterion o$

con#ergence, a series o$ scales o$ classi$ication and also t"e a$$erent notation< on a scale $rom 1 to , 1

representing L"ig"ly di#ergentM and meaning L"ig"ly con#ergentM or LoptimalM.

In Table no. A we present, in a synt"etic manner, t"e measurement and t"e selected inter#als, in order

to clari$y, as muc" as possible, our options $or t"ese inter#als.

&'aluation inter'als o) the nominal con'ergence Indices )or the in)lation IHIPC!)or the Maastricht long

term interest rate IM"#IR! )or the exchange rate I&R!)or the general go'ernment sur-lus de)icit I$%&!)or the

general go'ernment gross -u*lic de*t I$P% #a*le 4

&'aluation o) the

Index o) nominal

con'ergence )or

HICP in)lation! II3PC

Highlydi'ergent

%i'ergent Con'ergent Highlycon'ergent

Inter'al N2 1 , 26 0.5 , 16 0 , 0.56

&'aluation o) the

Index o) nominal

con'ergence )or

Maastricht longterm

interest rate! IM"#IR

:ig"lydi#ergent

@i#ergent Con#ergent:ig"ly

con#ergent

Inter'al N2 1, 26 0.= , 16 0 , 0.=6

&'aluation o) the

Index o) nominalcon'ergence )or the

exchange rate against

euro! I&R

@i#ergent Con#ergent :ig"ly di#ergent ptimal

Inter'al NO15BO2.25B,

O15B6O1B, O2.25B6 O0B, O1B6

&'aluation o) the

Index o) nominal

con'ergence )or the

general go'ernment

sur-lus de)icit! I$%&

:ig"ly

di#ergent@i#ergent Con#ergent

:ig"ly

con#ergent

Inter'al N2 1 , 26 0 , 16 !2 , 06

&'aluation o) theIndex o) nominal

con'ergence )or the

general go'ernment

gross de*t! I$P%

@i#ergent Con#ergent:ig"ly

con#ergentptimal

Inter'al 1 , 26 0.5 , 16 0.25 , 0,56 0 , 0.256

+. 2#

3#I2$R

3%I2$

1 2 A

Source. author-s conception

T"us, $or the criterion on price stabilitywe "a#e c"osen an inter#al o$ 1 point $or di#ergence and o$

only 0.5 points $or con#ergence, pre$erring to classi$y t"e inde+ in L"ig"ly con#ergentL andrespecti#ely Lcon#ergentM, in order to grasp t"e discrete c"anges in :IC;s #ariation. In t"e case o$

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negati#e #alues $or in$lation i.e. Estonia in 2010, but closely to 0 #alue, we considered t"at t"at

country was still in a situation o$ strong con#ergence, "a#ing only a momentary slippage, so we le$t

unc"anged t"e general inter#al o$ classi$ication 0, 0.56.

Dor t"e long0term interest ratewe "a#e c"osen t"e same type o$ classi$ication, e+cept t"at we "a#eestablis"ed t"e inter#als o$ con#ergence in an asymmetric manner in order to capture t"e discrete

c"anges near t"e #alue o$ 0.= o$ t"e long!term interest rate nominal con#ergence inde+, IM"#IR.

1he "nde of nominal convergence of the echange rate, "&R "as not been actually calculated,because t"e re$erence $or t"is criterion is actually a band o$ #ariation o$ 6+5, ta(ing into account t"e

$luctuations against t"e central parity or, according to EC3, t"e c"anges compared to t"e a#erage

e+c"ange rate #is!F!#is euro $or t"e states non!participating in E) II, t"ere$ore, based on t"e #alues

recorded, 7)* "a#e been directly put in t"e classi$ication scale. Dor t"e inde+ o$ nominal

con#ergence o$ t"e e+c"ange rate t"e c"oice o$ t"e inter#als is easily e+plained by t"e $act t"at t"e

#alue o$ 6+5 is t"e ma+imum limit imposed by t"e criterion on e+c"ange rate #ariation $rom t"e

)aastric"t Treaty, 61.15 is a #alue commonly used in t"e past during t"e 8monetary sna(e8

mec"anism, discreet enoug" and also rele#ant $or t"e countries w"ic" do not c"oose a $i+ed e+c"ange

rate, suc" as countries wit" a tradition in c"oosing a $loating e+c"ange rate regime t"e C4ec"epublic, ;oland, omania. T"e #alue o$ 6+ is o$ten used as a $loatation target, unilaterally, by t"e

new )ember *tatess monetary aut"orities wit" a $i+ed e+c"ange rate regime, especially since

targeting t"e c"anges o$ t"e national currency central parity against euro wit"in a $luctuation range o$

O 1B in E)II does not impose EC3 any additional obligation. T"e 68 is c"osen gi#en t"e $act t"at

some o$ t"e 7)* use a $i+ed e+c"ange rate regime or e#en a currency board, wit" a strictly agreement

o$ pegging t"eir e+c"ange rates to t"e European currency.

For the criterion ofgeneral government deficit or surpluswe pre$erred a symmetric classi$icationbot" $or con#ergence and $or di#ergence, namely L"ig"ly di#ergentM, Ldi#ergentM, Lcon#ergentM and

respecti#ely L"ig"ly con#ergentM, considering t"at t"ere are countries w"ic" $it t"emsel#es discreet

enoug" bot" on t"e one side and on t"e ot"er side o$ t"e nominal con#ergence inde+ o$ go#ernment

surplus / de$icit, I$%&. T"us, t"e #alues strictly positi#e and "ig"er t"an one e+plain t"e di#ergenceprocess, because t"e benc"mar( is AB o$ ?@; $or t"e budgetary de$icit and t"e #alues under one and

respecti#ely lower t"an minus one, to a ma+imum o$ !2 points, e+plain t"e process o$ con#ergence.

T"e countries t"at $it lower t"an minus one point are t"ose countries w"ic" generally "a#e sustainable

budget surpluses in t"is case is, until 200>, 3ulgaria and Estonia.

1he "nde of nominal convergence of the general government gross debt, "!2' was set asLdi#ergentM, Lcon#ergentM, L"ig"ly con#ergentM and LoptimalM, because t"e 0B o$ ?@; re$erence

#alue allows more subtle classi$ication on t"e con#ergence side as in t"e case o$ t"e e+c"ange rate.

T"ere$ore, we pre$erred symmetric inter#als o$ 0.25 points $or con#ergence and inter#als o$ one point

$or di#ergence. T"ere are not enoug" re$erences in t"e literature in order to $it t"e inde+ in suc"

margins, but we consider t"at a #alue o$ 0.25 points is su$$iciently subtle and also rele#ant $or catc"ing

aspects o$ gross public debt con#ergence.

In all t"e t"ree years o$ analysis, we can calculate an a#erage #alue o$ t"e con#ergence $or :IC;,

)aastric"t long!term interest rate, general go#ernment surplus / de$icit and general go#ernment gross

debt. -lso, we can ma(e an assessment o$ t"e global con#ergence o$ eac" 7)* t"roug" a nominalconvergence global inde 3"NC4, bot" e#ery year and also as an a#erage o#er t"ree years, $or t"e

purpose o$ $acilitating a multi!annual assessment, outlining t"e sustainability o$ t"e con#ergence

process. T"is inde+ is calculated as t"e arit"metic a#erage o$ t"e notations o$ all con#ergence indices

$or eac" criterion.

9e present t"e e#aluation o$ eac" inde+, and also t"e synt"esi4ed assessments t"roug" an inde+ o$

global nominal con#ergence, w"ic" will allow us to establis" a "ierarc"y regarding t"e 7)*

con#ergence. T"us, Table s"ows t"e results obtained.

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&'aluation o) the Indices o) nominal con'ergence )or the in)lation IHIPC!)or the Maastricht longterm

interest rate IM"#IR! )or the exchange rate I&R!)or the general go'ernment sur-lus de)icit I$%&!)or the

general go'ernment gross -u*lic de*t I$P%and )or a nominal con'ergence glo*al index I2C #a*le 9

&'aluation o) the Indices o)

nominal con'ergence! IHIPC! IM"#IR!I&R!I$%&!

I$P%

IHIPC IM"#IR I&R I$%& I$P%

&'aluation o) the

nominal

con'ergence glo*alindex! I2C: a'erage

'alue

/ulgaria

200> + 4 9 9 9 4.1

200H 4 1 9 1 9 4

2010 1 1 9 4 4 1.;

T"e t"ree years

a#erage inde+ o$ eac"criterion

1.8 1.4 9.8 4.8 4.7 4.8

Romania

200> + 1 1 1 9 1.1

200H 1 1 + + 4 +.;

2010 + 1 1 + 1 +.

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