Monetary reality and economic adaptability of new entrants to the EU

Abstract

The New EU entrants have face obstacles such as adjusting to a market economy, integration into The EU, and a single currency, to name a few. One major obstacle is the fact that the voting members consist of the six Executive Board members, and the 12 chairmen of the central banks of the original countries. In any given period this gives two votes to six of the original 12 countries. However, new members have no voting rights. This paper uses the Taylor Rule to determine if the monetary policies of the ECB match the economic realities of the EU new members.