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Nová kritéria pro přijetí Eura
[New Euro Convergence Criteria]

Author

Listed:
  • Aleš Michl

Abstract

The sovereign debt crisis inside the European Monetary Union (EMU) as well as competitiveness problems of some EMU members made the members and non-members of the club address one question: Is a monetary union advantageous? This paper deals with the issue whether or not the Maastricht criteria are good indicators for deciding to join the eurozone, namely for a small open economy, as the Czech Republic. In particular, this analysis addresses the issue of price competition, which can be measured by the real effective exchange rate. In fact, the Maastricht criteria do not reflect the competitiveness of a country. Thus the arguments concerning the advantages/disadvantages of the adoption of a common currency should not be based only on the Maastricht criteria, but at first on the philosophy of the real effective exchange rate. We define a basis for setting new criteria to decideing on joining the monetary union. To sum up, if depreciation/devaluation of the real exchange rate is not a competitive advantage for both Czech exports and the Czech economy (especially in the long term), then the main economic argument against joining the EMU disappears.

Suggested Citation

  • Aleš Michl, 2016. "Nová kritéria pro přijetí Eura [New Euro Convergence Criteria]," Politická ekonomie, Prague University of Economics and Business, vol. 2016(6), pages 713-729.
    • Handle: RePEc:prg:jnlpol:v:2016:y:2016:i:6:id:1105:p:713-729
    DOI: 10.18267/j.polek.1105
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    References listed on IDEAS

    as
    1. Milan Gylánik, 2012. "Equilibrium real effective exchange rate estimation for the Slovak economy," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 1(2), pages 97-132.
    2. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766.
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    More about this item

    Keywords

    real effective exchange rate; productivity; competitiveness; unit labour costs; devaluation; trade; exports; open economy; monetary policy;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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