POLITICAL BUSINESS CYCLES IN TRANSITION COUNTRIES, EU MEMBER STATES

Political and economic reality in transition countries, EU member states is still quite different than in other member states. Electoral cycles in selected countries occurred in terms of EU enlargement and specified economic framework after accession to its membership as defined by mutual agreements. A change of government in the circumstances of the increasing demands for social welfare improvements and personal standards could lead to time inconsistency problem of economic policy. Moreover, after getting the mandate to form the new government such circumstances may be the reason that left-wing or right-wing parties do not implement economic policy that is announced before the election. Considering the fact that the central banker has a legislative duty to coordinate the implementation of monetary policy with the economic policy conducted by the government, he can also be in a position to threaten his primary goal - to maintain monetary stability. The research has shown that there are not political business cycles in the transition countries in the form as they are presented in developed countries. Nevertheless the result does not mean that the left or right wing parties implement a consistent economic policy after receiving the mandate to form a new government in relation to the announced economic policy before elections. One of the major factors that have influenced on this result is still unsatisfactory profile views of political parties in transition countries, because the practice of party activities often differs significantly from established programming framework. Furthermore, the determined economic guidelines of the EU do not allow political parties to conduct other government economic policy, whether they are left or right-wing. Moreover, if the EU creates stronger mechanisms for fiscal responsibility in the future, it will be a real possibility of further narrowing the choice of an alternative framework to conduct economic policy at the national level.