The last few decades of the world economic structure have been characterized by a trend of global convergence in the context of the exponential interconnectedness of initially divergent financial markets. With deeper trade and financial integration, nationally oriented monetary policy is confronted with serious obstacles and limitations, having in mind higher vulnerability to the external crisis shocks. The focus of this analysis is the heterogeneous monetary responses of the ECB and the NBS to the same external shocks induced by the Great 2008 Recession. The main findings suggest that both monetary systems should rely on discretionary policy taking current macroeconomic health into account. In contrast to the monetary responses to the Global Recession, the analysis shows that the reactions to the COVID-19 crisis remained faithful to unorthodox measures in ECB’s case but unrelated in NBS’s case.

After the global economic crisis, a broad consensus has emerged that membership in the Eurozone exerts a strong pressure on fiscal policy, since it is characterized by the dichotomy of common monetary policy and heterogeneous fiscal policies. This paper analyzes the performance of fiscal policies, highlighting the nexus between the public revenues and public expenditure from the angle of 19 Eurozone economies in the period 2010q1-2020q4. The research is based on Dumitrescu & Hurlin (2012) and Juodis, Karavias & Sarafidis (2021) Granger non-causality tests in macro panels in order to test causality direction, as well as Westerlund errorcorrection-based panel cointegration test to analyze fiscal sustainability. Having in mind the heterogeneity and divergency of the Eurozone members, sub-samples were estimated, concerning the core, the periphery and the emerging Eurozone economies. The results imply that all Eurozone economies achieve weak fiscal sustainability, while all economies from the group of Eurozone periphery applied "tax and spend" hypothesis. The empirical finding could be related to the fact that Eurozone periphery economies were hit harder by the global and sovereign debt crisis, and that implemented austerity and bail-out programs were adequate, thus resulting in sustainable fiscal position, reducing heterogeneity of fiscal performance within the Eurozone economies.

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Due to the single market within the European Union (EU), capital mobility has created many challenges in the field of tax policy, especially whether taxes should be coordinated or governments should retain fiscal sovereignty for the sake of tax competitiveness. In order to attract foreign direct investment (FDI), emerging EU economies most often choose the policy of tax reduction and particularly lowering the effective average tax rates (EATR). The purpose of this paper is to empirically assess the impact of changes in the EATR on the decision to localize FDI in emerging EU economies in the period 1998–2021, in the framework of cross-sectional dependent, non-stationary, heterogeneous panels. Using the (Pooled) Mean Group estimator, the long-run relationship between the EATR and the FDI is revealed. The error-correction parameters are significant and heterogeneous, showing that the speed of adjustments towards equilibrium is different, but the highest in Estonia. Accession to the EU contributed faster adjustments to the long-run relationship in the majority of the emerging EU economies, while a broader set of potential determinants of FDI localization is taken into consideration and estimated using the Panel-corrected standard error method. Results showed de facto tax competitiveness in the group of emerging EU economies, instead of de jure tax coordination in the EU.

An essential aspect of deepening the level of economic integration between European economies is the reduction of mutual economic disparities, which is especially emphasized by the formation of the supranational monetary authority of the Euro-zone member states. However, fixing the currency for the euro and losing monetary sovereignty in the circumstances of a structurally heterogeneous system meant that the same monetary policy provoked different repercussions for member states. This research aims to point out the differences in the exchange rate transmission mechanism between the representatives of two groups of Euro-zone member states: the core of the EZ (Germany, Finland, Belgium, and France) and the periphery of the EZ (Greece, Spain, Portugal, Ireland), in the 1999M1-2021M1 time horizon. Empirical findings are based on estimates of the VAR model, i.e. derived impulse response functions in the circumstances of shock transmission (nominal effective exchange rate) to inflation (consumer price index). The results of the research indicate the asymmetry of the exchange rate transmission mechanism in terms of a more pronounced and longer degree of exposure of peripheral economies to shocks of the nominal exchange rate compared to the representatives of the core of the Euro-zone. Empirical findings confirm the asymmetry of the exchange rate transmission mechanism as one of the indicators of the weakness of the Euro-zone, given the inflationary diversity and the consequent anomalies of the monetary union with heterogeneous membership.