FISCAL POLICY AND REAL CONVERGENCE. THE CASE OF CENTRAL AND EASTERN EUROPEAN COUNTRIES

The European Union integration assumes that countries realized a real convergence process which is influenced by fiscal policy of each country. This study analyzed both absolute convergence (all countries will reach the same steady state level of income) and conditional convergence (countries converge to their own steady state level of income). These hypotheses were tested for Central an Eastern European Countries (1996- 2006), focused on the impact that fiscal policy instruments had on economic growth and conditional convergence.