The prospect of Intermarium integration in the light of consumption risk sharing

Objectives: After the collapse of Communism in Central and Eastern Europe, the idea of joining a prosperous bloc, which would provide financial assistance, seemed an opportunity not to be missed. However, with the possibility of the funding drying up, and the initial feeling of euphoria fading, the alignment of CEE and Western Europe on values was put to a test. This gave way to discussions about alternatives to the EU. One of them is Intermarium. This paper examines the potential benefits Intermarium countries could attain in terms of consumption risk sharing. Aims: The research takes an alternative approach to economic integration, concentrating on economic stability. In particular, it makes an empirical analysis of consumption risk sharing in Intermarium, as well as drawing a comparison with the EU and the euro zone core. Research Design & Methods: The paper uses method of risk sharing assessment proposed by Kose et al. (2009) extended by the authors to accommodate panel data setting. Findings: As the empirical results illustrate, the past integration between the old EU and its new member states weakened the Intermarium mechanisms of consumption insurance, especially in comparison to the euro zone countries. Implications / Recommendations: The potential benefits of Intermarium fall short of the EU alternative. Contribution / Value added: The paper presents the results of the first examination of the extension of risk sharing in Intermarium countries.