In this paper, we study the readiness of Bulgaria, Croatia and Romania to adopt the common monetary policy of the ECB in the context of the third round of euro area enlargement. Following the later stages of the optimal currency area (OCA) theory we focus on the coherence of economic shocks between candidate countries and the euro area and analyse the relevance of euro area shocks for key macroeconomic variables in these countries. Our results, based on a novel empirical approach, show that the overall importance of those shocks that are relevant for the ECB is fairly similar in candidate countries and the euro area. The cost of joining the euro area should, therefore, not be pronounced, at least from the aspect of the adoption of the common counter-cyclical monetary policy. This conclusion holds for all three candidates, despite important di¤erences in monetary and exchange rate regimes.

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Modern economies are becoming more knowledge-intensive and service-oriented, which makes human capital more important than ever for mid-term and long-term growth. Therefore, education, the main channel of governments' influence on human capital formation, became important research subject in the field of economic growth. This paper examines efficiency of public expenditure on secondary and tertiary education in the New Member States (NMS) in EU; only efficient government spending can generate adequate returns in terms of contribution to economic growth. Data Envelopment Analysis (DEA) is applied to assess relative technical efficiency of public expenditure on secondary and tertiary education in NMS, with a particular focus on Croatia. Input variables are public expenditure on education per student and as % of total education expenditure, while output variables for secondary education are PISA results and for tertiary education share of unemployed with a tertiary education and Shanghai ranking of leading national universities. The results show high inefficiency of public spending on education in Croatia.

The aim of this paper is to quantify the effects of changes in functional income