Work detail

Euro zone and fiscal transfers: does it mean wasting of time or necessity?

Author: Bc. Tomáš Paul
Year: 2011 - summer
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Work type: Bachelors
Language: Czech
Pages: 53
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Abstract: The bachelor thesis discusses possible solutions of asymmetric economic shocks in euro-area. The first chapter shows that some of the criteria of the theory of optimum currency area are not fulfilled therefore the euro-area is more vulnerable to the asymmetric shocks. The second chapter introduces six proposals of the fiscal transfer mechanism as they are presented in literature. The third and fourth chapter analyzes and compares the construction of the mechanisms and fulfilling of seven features that the fiscal transfer mechanism should have. In the empirical part are calculated transfers for two mechanisms. The comparison shows considerable differences between them. The conclusion of the thesis is that the construction of the fiscal transfer mechanism is difficult because of the features of the euro-area and faces many problems, therefore the implementation cannot be recommended for the time being.

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