Research Papers

The paper is focused on issues of fiscal policy coordination in the Euro area and the national fiscal policy options with regard to the convergence requirements for the entry of the EMU by new EU member states. The main research question concerns the evaluation of the impact of the fiscal sovereignty in the new EU member states on their preparation to join the Euro area. The differentiation of fiscal policies in the EU has become an issue in achieving compliance with the EMU criteria for public finances. An evaluation is made of the considerable differentiation of the EU national tax systems and tax structures which result in tax competition among different member states and in erosion of the tax harmonization achieved in the Single market.The differentiation of the direct taxes among the old and the new EU member states is analyzed in order to discuss the options for further coordination of the corporate taxation. As the existing fiscal barriers among the EU states have become a substantial barrier to the internal trade in the EU further steps to tax harmonization are revealed as a medium term options. The challenges of cyclical adjustment and fiscal consolidation sustainability in the new EU member states are analyzed by comparative study of their own experience and that of the EMU member states. Different types of fiscal policies are analyzed quot; reflationary, deflationary and supply side oriented policies. Based on empirical analysis the comparison of three types of fiscal policies is undertaken in order to evaluate the high degree of differentiation among the implemented fiscal policies in the countries' "ins" and "outs' of the EMU of the EC. Conclusions are drawn for the main trends in the EU governance reform and the fiscal sustainability of the EMU member states and the new EU member states.