Effects of Accession to the EU on Prices, Wages and Aggregate Demand in CEE Countries

The great debate about the European Union’s eastward enlargement has so far been marked by a prejudiced view that is probably rooted in pressure for early accession exerted by the transition countries on the one hand, and in the EU’s procrastination policy on the other. This prejudice holds that under present general conditions — that is, differ-ent factor endowments in the East and the West, hence, relatively low wages in the East, and current EU policies — the countries joining the EU would be the potential winners of accession, while the current members would be the losers. In reality the distribution of macro-economic costs and burdens is considerably more complicated.