AN ANALYSIS PERTAINING TO THE COMPARISON BETWEEN THE EUROPEAN UNION MEMBER STATES AND TURKEY WITHIN THE SCOPE OF MAASTRICHT CRITERIA

Abstract

The research has set its sight on the assessment of Turkey’s economic performance with that of the EU member states in terms of the concepts of Maastricht Criteria. Among the criteria considered are five featured variables comprised of inflation rate, long-term interest rate, budget deficit, government debt stock, and exchange rate. Right off the bat, the illustrious factor analysis is applied to 2017 data, then the pivotal variables about fiscal discipline and monetary discipline are punctiliously calculated, and finally an accurate ranking of states is created for each individual indicator. It is found that Turkey relatively fails to reach the monetary discipline when it comes to analyze the ranking obtained from factor analysis, while relatively managing to accomplish the fiscal discipline. Herein the Wilcoxon W Statistics Test is used to address the question, do the rankings vary by position – Eurozone or Non-Eurozone – of states? Consequently, such an intriguing conclusion is drawn like that no matter what position a state has, it is traditionally distinguished by its monetary discipline, not its fiscal discipline as a rule. Starting from this point of view, the fiscal discipline should also be regarded as an important benchmark to be carefully observed as equally as the monetary discipline for the states in Eurozone, but it goes without saying eventually more attention is paid to monetary discipline than fiscal discipline in real-life world. However, when it comes to compare the performance of Turkey which is an outstanding state has yet to manage to be a member of EU with that of European Union member states, Turkey’s enthusiastic efforts germane to achieve a satisfactory fiscal discipline should be deeply appreciated by the EU. Whereas, given the present miserable situation of Greece which has been an EU member state experiencing the same economic convergence and standing in the identical domain of attraction with Turkey but also disastrously departing from monetary discipline for years, Turkey’s infelicitous divergence from maintaining a stable monetary discipline should be advisably regarded tolerable by EU.