The optimum currency area (OCA) theory evaluates the currency area as optimum at a time when the participating countries are not at risk of macroeconomic instability due to the existence of a common currency. The OCA index is a tool used to comprehensively assess the costs and benefits of a candidate for joining a monetary union. It is constructed as a bilateral index assessing the appropriateness of introducing the single currency in two countries. The article presents the OCA index quantified for the Czech Republic in relation to Germany, which is considered to be the core of the European Monetary Union. Since the OCA index needs to be interpreted in a temporal or spatial comparison, the calculation of the OCA index was also performed for other countries of the Visegrad Group (V4) and furthermore for Austria and Portugal, using data from the period of 2007–2019. The results of the OCA index show a high degree of variability in the Czech Republic in the observed period. While in the first half of the period under review, the Czech Republic achieved the best results within the assessed economies and the Czech Republic's level of preparedness for the common currency with Germany was higher than in the case of Austria, it fell sharply after 2012. The reason can be seen, among other things, in the higher growth rate of the Czech economy than in the euro area. Although the OCA index is an indicator assessing the preparedness of an economy to join a monetary union, it cannot be the only indicator. Other important criteria include, for example, labour mobility, price and wage flexibility, fiscal integration and more. Although the Czech Republic is approaching the euro area average in all key indicators, the gap from it remains significant for most indicators and thus continues to be a factor against the adoption of the euro in the coming years.
As the world continues to see various facets of financial integration, the topic has sparked a great deal of discussions among policymakers and economists. The article analyzes benefits and risks of financial integration in the context of the European Union, which has facilitated global financial integration immensely by creating common currency among European Monetary Union countries and harmonizing regulations across the region. Upon examining main pros and cons of financial integration in detail, I conclude that financial integration can be beneficial in the longrun if corrective and preventive measures are enforced to curtail risks and threats it poses.
The main objective of this study is to analyze endogenous destabilizing and disintegration tendencies within the framework of the crisis of the European Monetary Union, which grew into a crisis in the real economy. This involved several EU members states at the same time. Achieving this goal requires addressing a number of theoretical and historical lessons, that point to an important dilemma for the survival of the European project in the future. Research methods include: systematic, procedural and situational approaches to the study of Eurozone countries and participants in the integration project and disintegration influences and an institutional approach to the detection and analysis of dysfunctional institutional configuration within the framework of the European Monetary Union. Of significant importance for the study of the problems of economic integration and disintegration was the use of the principles of universal scientific methodology. This included an integrated approach to problem solving, which envisaged a general vision of the movement of capital in the context of the European integration project. Also, the application of methods of logical models, induction and deduction. The unity of logic and history in the development of a research object confirming the synergistic effect of historical and theoretical lessons.
This paper seeks to explore the PSPP decision of the German Constitutional Court and its effect on the monetary policy decisions taken by central banks. It begins by exploring the decision and its effect in Germany, together with its wider implications for the European Monetary Union before moving onto consider the standard of review that should be applied by the Courts when they are required to review central banks actions. Conclusions are reached to show that any standard of review should be limited because of the unique economic and political circumstances in which central bank decision making takes place. Keywords: Central Banking; Judicial Review; Proportionality; European Law; European Monetary Union.
Four indicators corresponding to the four targets of the European Monetary Union were calculated. The study showed that: (a) concerning the deviation of state’s general government deficit/surplus from 3% of gross domestic product (GDP), all member states had reached their target, with the exception of Cyprus, which was slightly under the target, (b) concerning the deviation of state’s general government debt from 60% of GDP, half of all European Union (EU) member states did not reach their targets, and there was a lot to be done, especially from the EU15 member states, (c) concerning the deviation of state’s inflation rate from the mean of the three states with best results of +1.5%, it was observed that the average value of EU28 member states had reached the final target, mainly due to the performances of the EU15 member states, (d) and concerning the deviation of state’s interest rate from the mean of the three states with the best results of +2%, it was observed that the average value of EU28 member states had reached the final target.
AbstractOur study estimates the effects of the European Monetary Union (EMU) on high-technology (HT) export and assesses the potential knowledge spillovers of such trade. Irrespective of the importance of the HT trade channel, none of the previous studies in the literature focus on the effects of a common currency on HT trade. Increasing trade in the HT sector may lead to more efficient use of resources and help countries to move towards a knowledge-based economy. Moreover, it may lead to higher overall growth. After considering multilateral resistances, pair fixed effects and bias correction in the preferred (three-way bias-corrected) model, EMU membership becomes negative and statistically non-significant for HT exports. Furthermore, our findings indicate that the effect of the EMU on HT exports is country-specific, which lends support to the notion of non-homogenous knowledge transfer and country-related knowledge-based economic development within the EMU.
The work of Leopold Kohr has attracted attention from social scientists in the field of international political studies, but few political economists have studied his theoretical argument in detail. Few students have tried to unite economic and polit-ical arguments to understand his contribution in a more analytical way. We will argue that Kohr's principal theory (diseconomies of scale) was inherently econom-ic, an attempt to elaborate on the concept of scale in a broader perspective and in a more complex way, including the idea of quality and, in particular, power rela-tions. In this paper, we try to make sense of Kohr's idea of decentralisation by studying his contributions from a political economy perspective. Moreover, con-clusions will be drawn that relate Kohr's view to present-day governance problems in the European Monetary Union, in which actual governance reflects all dangers that this scholar feared.
Niels Thygesen (born 1934) played for nearly five decades an influential role as a policy orientated academic, especially in the process of economic and monetary integration in Europe. He is especially known as a member of the Delors Committee and as the first Chair of the European Fiscal Board. As part of a re-search program on collecting memories, this paper publishes the results of several interviews with him. His early life offers insightful observations on the develop-ment of the economics profession in the postwar years (he was close to Nobel Prize laureates as Franco Modigliani and Milton Friedman). Thygesen's involvement with the process of European monetary integration really started in 1974 with his membership of the Marjolin Committee (which provided an assessment of the failure of the 1970 Werner Report). Since then he has been involved in a multitude of committees and initiatives, like the OPTICA groups, the All Saints Day Manifes-to, the Committee for Monetary Union in Europe (an initiative of Giscard and Schmidt) and the Euro50 Group.