Work detail

EMU Enlargement in Context of the OCA Theory

Author: PhDr. Těthalová Jana
Year: 2004 - summer
Leaders: doc. Mgr. Tomáš Holub Ph.D.
Consultants:
Work type: Doctoral
Language: English
Pages: 93
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Abstract: This paper describes the future European Monetary Union (EMU) enlargement towards the Central and Eastern Europe from the perspective of the Optimum Currency Area (OCA) theory. The formal preconditions of the EMU entry are reviewed with a comment on the current state of the 2003 Maastricht criteria fulfilment. The main characteristics of the OCA theory are assessed and the empirical studies focusing on this theme are surveyed. In bigger detail are then summarised those empirical OCA studies that deal with the topic of EMU enlargement towards Central and Eastern Europe. Further, the empirical study of four new EU members (the Czech Republic, Slovakia, Hungary and Poland) is accomplished. This study analyses the correlation of the demand and supply shocks between these four countries and benchmarks: Germany, the EU and the EMU with the help of the VAR model. The area of asymmetric shocks forms one of the most important themes of monetary unions in the framework of the OCA theory. Therefore, a thorough discussion of the economic policy instruments and the economic mechanisms ability to adjust to asymmetric shocks follows

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