Eurozone shocks drive inflation in South Eastern European economies, impacting budgets.
The article looks at how economic changes in the eurozone affect Croatia, Macedonia, and Bulgaria. By using a special statistical method, the researchers found that when the eurozone grows, it also boosts the economies of these countries. They also discovered that inflation in the eurozone quickly affects inflation in the South-East European countries. However, the interest rates in these countries are not closely tied to the eurozone's rates. Lastly, the researchers found that the fiscal policies in these countries try to counteract the effects of economic growth and monetary changes in the eurozone.