A new proceuure to deal with the macroeconomic imbalance in the European Union

Abstract

The objective of the presented paper is, in the first place, to look into the solution of current serious macroeconomic problems of member states of the European Union by laying down a new enforcement mechanism described in the Alert Mechanism Report (AMR). In recent years distinctive and persistent macroeconomic imbalances have accumulated that are reflected in high and persistent external deficits and surpluses, in the persistent loss of competitiveness, in the dramatic increase in indebtedness and in the increase in real estate bubbles, which were one of the causes of the current financial crisis. Macroeconomic problems of the European Union’s economies are dealt with in the very AMR, which defines a new procedure for the prevention and reformation of macroeconomic dysfunctions. Based on compliance with ten selected indicators according to determined threshold values those economies are identified that are liable to undergoing various macroeconomic imbalances in years to come. In the end the paper uses selected statistic methods, namely cluster analysis, to look into the mentioned indicators of external imbalances and competitiveness and imbalances inside an economy in question. The article focuses on the analysis of the created clusters according to their similarity in the development of the mentioned macroeconomic indicators and on the assessment of the conclusions of the EU commission.