This section examines the differentiated effects of the COVID-19 pandemic on growth across the euro area. Persistent sharp cross-country divergences complicate the functioning of the economic and monetary union (EMU), and may weaken the socio-economic and political support for EMU. Based on a reduced-form econometric analysis of macro-data and an empirical analysis of turnover patterns and prospects for recovery, the section identifies the economy's sectoral composition and the strictness of the lockdown measures as important factors driving the divergent impact of the pandemic on economic growth. More specifically, the analysis suggests that countries with a larger share of contact-intensive activities have experienced stronger negative growth, and that a higher level of trade openness generally amplified the negative impact of the lockdown measures. A brief overview of monetary and fiscal conditions suggests that the forceful responses of monetary and fiscal policies have helped to dampen the economic shock generated by the pandemic and the related lockdown measures and in so doing have helped contain the divergence forces triggered by the crisis. The risk exists that cross-country divergence will persist well after the pandemic has subsided and the exceptional policies have ended.
This section examines the differentiated effects of the COVID-19 pandemic on growth across the euro area. Persistent sharp cross-country divergences complicate the functioning of the economic and monetary union (EMU), and may weaken the socio-economic and political support for EMU. Based on a reduced-form econometric analysis of macro-data and an empirical analysis of turnover patterns and prospects for recovery, the section identifies the economy's sectoral composition and the strictness of the lockdown measures as important factors driving the divergent impact of the pandemic on economic growth. More specifically, the analysis suggests that countries with a larger share of contact-intensive activities have experienced stronger negative growth, and that a higher level of trade openness generally amplified the negative impact of the lockdown measures. A brief overview of monetary and fiscal conditions suggests that the forceful responses of monetary and fiscal policies have helped to dampen the economic shock generated by the pandemic and the related lockdown measures and in so doing have helped contain the divergence forces triggered by the crisis. The risk exists that cross-country divergence will persist well after the pandemic has subsided and the exceptional policies have ended.
This section examines the differentiated effects of the COVID-19 pandemic on growth across the euro area. Persistent sharp cross-country divergences complicate the functioning of the economic and monetary union (EMU), and may weaken the socio-economic and political support for EMU. Based on a reduced-form econometric analysis of macro-data and an empirical analysis of turnover patterns and prospects for recovery, the section identifies the economy's sectoral composition and the strictness of the lockdown measures as important factors driving the divergent impact of the pandemic on economic growth. More specifically, the analysis suggests that countries with a larger share of contact-intensive activities have experienced stronger negative growth, and that a higher level of trade openness generally amplified the negative impact of the lockdown measures. A brief overview of monetary and fiscal conditions suggests that the forceful responses of monetary and fiscal policies have helped to dampen the economic shock generated by the pandemic and the related lockdown measures and in so doing have helped contain the divergence forces triggered by the crisis. The risk exists that cross-country divergence will persist well after the pandemic has subsided and the exceptional policies have ended.
This section examines the differentiated effects of the COVID-19 pandemic on growth across the euro area. Persistent sharp cross-country divergences complicate the functioning of the economic and monetary union (EMU), and may weaken the socio-economic and political support for EMU. Based on a reduced-form econometric analysis of macro-data and an empirical analysis of turnover patterns and prospects for recovery, the section identifies the economy's sectoral composition and the strictness of the lockdown measures as important factors driving the divergent impact of the pandemic on economic growth. More specifically, the analysis suggests that countries with a larger share of contact-intensive activities have experienced stronger negative growth, and that a higher level of trade openness generally amplified the negative impact of the lockdown measures. A brief overview of monetary and fiscal conditions suggests that the forceful responses of monetary and fiscal policies have helped to dampen the economic shock generated by the pandemic and the related lockdown measures and in so doing have helped contain the divergence forces triggered by the crisis. The risk exists that cross-country divergence will persist well after the pandemic has subsided and the exceptional policies have ended.
Subject of the final master's thesis is topical, because development and functioning of the common European Union monetary policy is especially important step in European integration, opening the way for final political approach of the member states. Thus a detailed study of this sphere of the European Union politics is necessary striving to cognize possibilities and challenges of the future integration processes. The last expansion in the Euro-area happened on 1 January 2009, when the euro was introduced in Slovakia. A number of the EU member states that use the currency of the European Union increased up to sixteen. Though Estonia still hasn't reached complete integration in the EMU process, yet in May 2010 European Commission officially suggested Estonia to join the Euro-area from 1 January 2011. Objective of the research is to assess Slovakia's and Estonia's economic and legal convergence. Considering the objective of the research and set tasks, stages of development of the Economic and Monetary Union in Europe are covered in the work in theoretical aspect, advantages and disadvantages of participation in the Economic and Monetary Union are highlighted; policy of the European Central Bank and other institutions of the European Union in the process of euro-area expansion is analysed; conformity of Slovakia's and Estonia's macroeconomic indices to criteria of Maastricht convergence and harmonization of the European Union Law and national law of the mentioned countries and estimation of Slovakia's benefits being in euro-area is presented as well as Estonia's preparation to join the Economic and Monetary Union. Performed dynamic analysis of Slovakia and Estonia's inflation, government budget deficit and gross debt, long-term interest rate and national currency stability level as well as analysis of the documents of the European Union, Slovakia and Estonia has revealed that Slovakia's convergence criteria have stabilized just after joining the EU and particular attention was paid to inflation reduction process. In convergence reports of 2008 published by the European Central Bank and European Commission Slovakia satisfied economic convergence criteria at least during the short period, however price stability and fiscal development durability in the long-term perspective remained unvalued. Situation in 2009 is a matter of great concern not only because of the price increase tendencies but also through unreliable management of public finances. Situation in Estonia is a bit different; however stabilisation of convergence criteria is also noticeable after joining the EU. While Slovakia has been trying to stabilize and retain convergence criteria keeping within control limits, Estonian Government spared a lot of attention towards securing stability of public finances, and this is proved by the fact that fiscal surplus and amount of gross debt of the government sector having prevailed during the period 2003 – 2008 haven't exceeded the limit of 8 per cent of GDP. However economic crisis that broke in 2008 caused overheat of Estonian economics. Inflation became uncontrolled and reached 10,6 per cent, deficit of government sector increased, simultaneously increasing the gross debt of the government sector. Thus Estonia's convergence in the long-term perspective is estimated as nondurable through macroeconomic imbalance likely to recur in future. The most important legal standards that required harmonization in Slovakia and Estonia: regulations ignoring objective, functions, independence of the National Bank of Slovakia and the Bank of Estonia. Legal preparation is necessary for smooth introduction of the euro, providing necessary procedures of the introduction of the euro. However there are still certain demerits in the law of the Bank of Estonia related to integration of the Bank of Estonia to the European System of Central Banks with respect of issuance of banknotes and collection of statistical information. Research methodology. A comparative historical method was applied describing origin, development and conception of common monetary politics of the European Union. Analysis of literature and legal documents was applied in order to ascertain the role of the ECB and institutions of the European Union in the process of euro area expansion. A data analysis method was applied in order to establish macroeconomic problems in Slovakia and Estonia. A comparative analysis method was applied while analysing and assessing economic and legal convergence in Slovakia, Estonia and euro area. A generalization method was applied to make clear whether thorough satisfaction of economic convergence criteria and legal standards has been implemented in Estonia; assessment of Slovakia's benefit in euro area is presented, and final conclusions are drawn.
Subject of the final master's thesis is topical, because development and functioning of the common European Union monetary policy is especially important step in European integration, opening the way for final political approach of the member states. Thus a detailed study of this sphere of the European Union politics is necessary striving to cognize possibilities and challenges of the future integration processes. The last expansion in the Euro-area happened on 1 January 2009, when the euro was introduced in Slovakia. A number of the EU member states that use the currency of the European Union increased up to sixteen. Though Estonia still hasn't reached complete integration in the EMU process, yet in May 2010 European Commission officially suggested Estonia to join the Euro-area from 1 January 2011. Objective of the research is to assess Slovakia's and Estonia's economic and legal convergence. Considering the objective of the research and set tasks, stages of development of the Economic and Monetary Union in Europe are covered in the work in theoretical aspect, advantages and disadvantages of participation in the Economic and Monetary Union are highlighted; policy of the European Central Bank and other institutions of the European Union in the process of euro-area expansion is analysed; conformity of Slovakia's and Estonia's macroeconomic indices to criteria of Maastricht convergence and harmonization of the European Union Law and national law of the mentioned countries and estimation of Slovakia's benefits being in euro-area is presented as well as Estonia's preparation to join the Economic and Monetary Union. Performed dynamic analysis of Slovakia and Estonia's inflation, government budget deficit and gross debt, long-term interest rate and national currency stability level as well as analysis of the documents of the European Union, Slovakia and Estonia has revealed that Slovakia's convergence criteria have stabilized just after joining the EU and particular attention was paid to inflation reduction process. In convergence reports of 2008 published by the European Central Bank and European Commission Slovakia satisfied economic convergence criteria at least during the short period, however price stability and fiscal development durability in the long-term perspective remained unvalued. Situation in 2009 is a matter of great concern not only because of the price increase tendencies but also through unreliable management of public finances. Situation in Estonia is a bit different; however stabilisation of convergence criteria is also noticeable after joining the EU. While Slovakia has been trying to stabilize and retain convergence criteria keeping within control limits, Estonian Government spared a lot of attention towards securing stability of public finances, and this is proved by the fact that fiscal surplus and amount of gross debt of the government sector having prevailed during the period 2003 – 2008 haven't exceeded the limit of 8 per cent of GDP. However economic crisis that broke in 2008 caused overheat of Estonian economics. Inflation became uncontrolled and reached 10,6 per cent, deficit of government sector increased, simultaneously increasing the gross debt of the government sector. Thus Estonia's convergence in the long-term perspective is estimated as nondurable through macroeconomic imbalance likely to recur in future. The most important legal standards that required harmonization in Slovakia and Estonia: regulations ignoring objective, functions, independence of the National Bank of Slovakia and the Bank of Estonia. Legal preparation is necessary for smooth introduction of the euro, providing necessary procedures of the introduction of the euro. However there are still certain demerits in the law of the Bank of Estonia related to integration of the Bank of Estonia to the European System of Central Banks with respect of issuance of banknotes and collection of statistical information. Research methodology. A comparative historical method was applied describing origin, development and conception of common monetary politics of the European Union. Analysis of literature and legal documents was applied in order to ascertain the role of the ECB and institutions of the European Union in the process of euro area expansion. A data analysis method was applied in order to establish macroeconomic problems in Slovakia and Estonia. A comparative analysis method was applied while analysing and assessing economic and legal convergence in Slovakia, Estonia and euro area. A generalization method was applied to make clear whether thorough satisfaction of economic convergence criteria and legal standards has been implemented in Estonia; assessment of Slovakia's benefit in euro area is presented, and final conclusions are drawn.
The article analyzes the problem of central bank independence a historical, theoretical, and practice terms. The independence of the arguments raised, disclosed in its essence, defines the limits of independence, the transparency of the operation in question. Accessible to the conclusion that the central bank should be independent from the government, while its activity in combination with the legislative and executive state institutions. The study examined the context of changes in European economic and monetary union within the independence dimension of the European System of Central Banks in format. Determined that under these conditions in some areas of the national central banks have independence, the other – the European Central Bank uses the services of national central banks, in addition to another – the European Central Bank is fully independent.
The article analyzes the problem of central bank independence a historical, theoretical, and practice terms. The independence of the arguments raised, disclosed in its essence, defines the limits of independence, the transparency of the operation in question. Accessible to the conclusion that the central bank should be independent from the government, while its activity in combination with the legislative and executive state institutions. The study examined the context of changes in European economic and monetary union within the independence dimension of the European System of Central Banks in format. Determined that under these conditions in some areas of the national central banks have independence, the other – the European Central Bank uses the services of national central banks, in addition to another – the European Central Bank is fully independent.
The article analyzes the problem of central bank independence a historical, theoretical, and practice terms. The independence of the arguments raised, disclosed in its essence, defines the limits of independence, the transparency of the operation in question. Accessible to the conclusion that the central bank should be independent from the government, while its activity in combination with the legislative and executive state institutions. The study examined the context of changes in European economic and monetary union within the independence dimension of the European System of Central Banks in format. Determined that under these conditions in some areas of the national central banks have independence, the other – the European Central Bank uses the services of national central banks, in addition to another – the European Central Bank is fully independent.
The article analyzes the problem of central bank independence a historical, theoretical, and practice terms. The independence of the arguments raised, disclosed in its essence, defines the limits of independence, the transparency of the operation in question. Accessible to the conclusion that the central bank should be independent from the government, while its activity in combination with the legislative and executive state institutions. The study examined the context of changes in European economic and monetary union within the independence dimension of the European System of Central Banks in format. Determined that under these conditions in some areas of the national central banks have independence, the other – the European Central Bank uses the services of national central banks, in addition to another – the European Central Bank is fully independent.
This article presents an analysis of the impact of cash social benefits on poverty reduction in two groups of EU countries (The "Old," Western Europe and the "New," Eastern Europe ). Models of a regression analysis of panel data were compiled to assess the changes in the most deprived part of the population, which included factors such as population income, social assistance payments, labor market activity, population indebtedness, long-term unemployment and education levels of the population. The results of the survey revealed the essential differences in the impact of social assistance on poverty: in the old EU countries, means-tested social benefits reduce the growth of poverty and material deprivation; in the Eastern European countries, which are characterized by a more liberal or "residual" welfare model, the poorest part of the population changes due to cyclical fluctuations in economic development and changes in long-term unemployment. Therefore, the key for reducing poverty is to reduce long-term unemployment. Means-tested social benefits in them are as effective as in the old EU countries.
This article presents an analysis of the impact of cash social benefits on poverty reduction in two groups of EU countries (The "Old," Western Europe and the "New," Eastern Europe ). Models of a regression analysis of panel data were compiled to assess the changes in the most deprived part of the population, which included factors such as population income, social assistance payments, labor market activity, population indebtedness, long-term unemployment and education levels of the population. The results of the survey revealed the essential differences in the impact of social assistance on poverty: in the old EU countries, means-tested social benefits reduce the growth of poverty and material deprivation; in the Eastern European countries, which are characterized by a more liberal or "residual" welfare model, the poorest part of the population changes due to cyclical fluctuations in economic development and changes in long-term unemployment. Therefore, the key for reducing poverty is to reduce long-term unemployment. Means-tested social benefits in them are as effective as in the old EU countries.
This article presents an analysis of the impact of cash social benefits on poverty reduction in two groups of EU countries (The "Old," Western Europe and the "New," Eastern Europe ). Models of a regression analysis of panel data were compiled to assess the changes in the most deprived part of the population, which included factors such as population income, social assistance payments, labor market activity, population indebtedness, long-term unemployment and education levels of the population. The results of the survey revealed the essential differences in the impact of social assistance on poverty: in the old EU countries, means-tested social benefits reduce the growth of poverty and material deprivation; in the Eastern European countries, which are characterized by a more liberal or "residual" welfare model, the poorest part of the population changes due to cyclical fluctuations in economic development and changes in long-term unemployment. Therefore, the key for reducing poverty is to reduce long-term unemployment. Means-tested social benefits in them are as effective as in the old EU countries.
This paper analyzes the legal framework of the Exchange Rate Mechanism II (ERM II), its objectives and practical aspects. This mechanism is the exchange rate policy of the euro area and non-euro area EU Member States participating in this mechanism, which aims to ensure the economic stability of the European Union and to prepare the countries for the adoption of the euro. ERM II plays an important role in Economic and Monetary Union as mean to ensure a stable economic and monetary system and stable prices. Moreover, it is one of the stages for countries to join the euro area. The ERM II is regulated in the most important legal acts of the European Union - the Treaties of Rome and Maastricht, as well as in more detailed legislation - the resolution and the treaty. When a Member State joins ERM II and agrees on central exchange rate and fluctuation margins, it is supported by intervention at the marginal and coordinated intramarginal intervention mechanisms. Intervention at the marginal is performed automatically, but also countries can agree on coordinated intramarginal intervention. Both types of intervention are carried out by the national banks of the Member States and the European Central Bank through the intervention to the foreign exchange market and thus adjusting the exchange rate. For a long time, Lithuania used the currency board as a currency management mechanism and used to fix the litas exchange rate with the US dollar. Finally, Lithuania became one of the first ERM II members, of those who joined the European Union in 2004. ERM II was used by Lithuania for more than ten years before the euro was introduced in 2015. ERM II will continue to be one of the key mechanisms in the European Union's public finance sector, but most of its participants will only be temporary as their participation is only one of the convergence requirements.
This paper analyzes the legal framework of the Exchange Rate Mechanism II (ERM II), its objectives and practical aspects. This mechanism is the exchange rate policy of the euro area and non-euro area EU Member States participating in this mechanism, which aims to ensure the economic stability of the European Union and to prepare the countries for the adoption of the euro. ERM II plays an important role in Economic and Monetary Union as mean to ensure a stable economic and monetary system and stable prices. Moreover, it is one of the stages for countries to join the euro area. The ERM II is regulated in the most important legal acts of the European Union - the Treaties of Rome and Maastricht, as well as in more detailed legislation - the resolution and the treaty. When a Member State joins ERM II and agrees on central exchange rate and fluctuation margins, it is supported by intervention at the marginal and coordinated intramarginal intervention mechanisms. Intervention at the marginal is performed automatically, but also countries can agree on coordinated intramarginal intervention. Both types of intervention are carried out by the national banks of the Member States and the European Central Bank through the intervention to the foreign exchange market and thus adjusting the exchange rate. For a long time, Lithuania used the currency board as a currency management mechanism and used to fix the litas exchange rate with the US dollar. Finally, Lithuania became one of the first ERM II members, of those who joined the European Union in 2004. ERM II was used by Lithuania for more than ten years before the euro was introduced in 2015. ERM II will continue to be one of the key mechanisms in the European Union's public finance sector, but most of its participants will only be temporary as their participation is only one of the convergence requirements.
