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Macroeconomic Imbalances in Euro-and Non-Euro Area Member States

Author

Listed:
  • Daniela Bobeva

    (University of National and World Economy, Sofia, Bulgaria)

  • Atanas Atanasov

    (University of National and World Economy, Sofia, Bulgaria)

Abstract

This paper examines the macroeconomic imbalances in the euro area countries in comparison with the non-euro area countries based on the set of indicators in the Scoreboard that is part of the Macroeconomic Imbalance Procedure (MIP), introduced in 2011. While the aim of the new alert mechanism is to identify potential risks this study goes further in measuring the level of risks by the scope of the deviation from the established thresholds. For this purpose an Integral Macroeconomic Imbalance Indicator (IMII) is constructed. It serves for comparing the level of imbalances between the countries in pre- and post- crisis period. The composed IMII indicates a tangible reduction in the scale of imbalances as compared to the pre-crisis period but the divergence between the countries enlarges. The results undermine the assumptions that the countries in the euro area will show fewer imbalances as compared to the countries outside of the monetary union. Based on the dynamics of IMII it could be assumed that maintaining the macroeconomic framework within the thresholds is necessary but not sufficient to prevent future crisis. The results further question the ability of the alert mechanism to identify the sources of a future crisis.

Suggested Citation

  • Daniela Bobeva & Atanas Atanasov, 2017. "Macroeconomic Imbalances in Euro-and Non-Euro Area Member States," Godishnik na UNSS, University of National and World Economy, Sofia, Bulgaria, issue 1, pages 25-37, December.
    • Handle: RePEc:nwe:godish:y:2017:i:1:p:25-37
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    References listed on IDEAS

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    3. Hickey, Ronan & Kane, Linda, 2014. "Ireland and the Macroeconomic Imbalance Procedure," Quarterly Bulletin Articles, Central Bank of Ireland, pages 70-81, July.
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    Cited by:

    1. Ignat Ignatov, 2023. "Convergence Determinants and Club Formation in the EU over 1999-2021," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 37-63.

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    More about this item

    Keywords

    macroeconomic imbalances; macroeconomic imbalances procedure scoreboard; EU financial sector; economic reforms; six pack;
    All these keywords.

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management

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