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Economic policy independence in EU member states: Political economy of Croatian membership

The independence of the economic policy of national states in the European Union is a relevant and politically controversial issue as notions of lost sovereignty are often evoked by populist political options. It is therefore important to distinctly outline the actual state of affairs. The article starts by surveying traditional and recent political, institutional and economic arguments on policy convergence in areas undergoing economic integration. The article continues by contrasting the complex notion of economic sovereignty and the ongoing developement of economic policy constrictions of EU (and eurozone) membership. Attention is then turned to Croatia in order to evaluate the maneuvering room left by the various constrictions and offer conclusions in terms of lost economic independence. Particular attention is awarded to the comparison of exchange rate policy, fiscal policy and monetary policy employed by member states in response to the crisis of 2008/09. We conclude that the policy restrictions imposed by EU membership and expected eurozone entry are in line with economic restraints and exhibited national policy preferences prior to EU entry. While economic independence in terms of crisis management is clearly reduced by virtue of EU and eurozone membership, its effects should not be felt as a change of policy direction in the case of Croatia.

Economic policy constrictions ; Monetary policy ; Fiscal policy ; EU ; Croatia

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