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Reflections on the Optimal Currency Area (oca) Criteria in the Light of EMU

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  • M.J. Artis

Abstract

The objective of this paper is first to review the use that has been made of Optimal Currency Area (OCA) theory in the European Monetary Union (EMU) context. Second, to look at some of its predictions in that respect. And third, to appraise some of the new theories - or speculations - that have arisen, partly as a result of the confrontation of the theory with the data. This is an area in which politics are very important; they play an important role in the reception and interpretation of positive work. Tentative ideas and speculative hypotheses acquire the aura of accomplished fact, whilst a single empirical illustration can be given the status of a many-times confirmed demonstration. This paper tries to be more careful in these remarks. Whilst history offers some instructive lessons, as illustrated for example in the work of Bordo and Jonung (1999), the fact is that in most relevant respects EMU represents an unparalleled experiment, with corresponding difficulties for empirical work.

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Bibliographic Info

Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 193.

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Date of creation: Dec 2002
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Handle: RePEc:chb:bcchwp:193

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References

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  1. Eichengreen, Barry & Bayoumi, Tamim, 1996. "Ever Closer to Heaven? An Optimum-Currency-Area Index for European Countries," Center for International and Development Economics Research, Working Paper Series qt5dt9501s, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
  2. Bayoumi, Tamim & Eichengreen, Barry, 1996. "Operationalizing the Theory of Optimum Currency Areas," CEPR Discussion Papers 1484, C.E.P.R. Discussion Papers.
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  9. Rogoff, Kenneth S., 2001. "Why Not a Global Currency?," Scholarly Articles 11129183, Harvard University Department of Economics.
  10. Asdrubali, Pierfederico & Sorensen, Bent E & Yosha, Oved, 1996. "Channels of Interstate Risk Sharing: United States 1963-1990," The Quarterly Journal of Economics, MIT Press, vol. 111(4), pages 1081-1110, November.
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  24. Robert F. Engle & Sharon Kozicki, 1990. "Testing For Common Features," NBER Technical Working Papers 0091, National Bureau of Economic Research, Inc.
  25. Artis, Michael J & Zhang, Wenda, 1995. "International Business Cycles and the ERM: Is there a European Business Cycle?," CEPR Discussion Papers 1191, C.E.P.R. Discussion Papers.
  26. Pagan, Adrian, 1997. "Policy, Theory, and the Cycle," Oxford Review of Economic Policy, Oxford University Press, vol. 13(3), pages 19-33, Autumn.
  27. Frankel, Jeffrey A. & Rose, Andrew K., 1997. "Is EMU more justifiable ex post than ex ante?," European Economic Review, Elsevier, vol. 41(3-5), pages 753-760, April.
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Citations

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Cited by:
  1. Boschi, Melisso & Girardi, Alessandro, 2009. "The contribution of domestic, regional and international factors to Latin America's business cycle," MPRA Paper 28147, University Library of Munich, Germany.
  2. Jorge Pérez-Rodríguez, 2006. "The Euro and Other Major Currencies Floating Against the U.S. Dollar," Atlantic Economic Journal, International Atlantic Economic Society, vol. 34(4), pages 367-384, December.
  3. Jonung, Lars, 2004. "To be or not to be in the euro? Benefits and costs of monetary unification as perceived by voters in the Swedish euro referendum 2003," MPRA Paper 1334, University Library of Munich, Germany.
  4. Foresti, Pasquale, 2007. "Is Latin America an Optimal Currency Area? Evidence from a Structural Vector Auto-regression analysis," MPRA Paper 2961, University Library of Munich, Germany, revised Apr 2008.
  5. Hall, S.G. & Yhap, B., 2008. "Measuring the Correlation of Shocks Between the UK and the Core of Europe," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 5(1), pages 17-26, March.
  6. Guglielmo Maria Caporale & Davide Ciferri & Alessandro Girardi, 2011. "Are The Baltic Countries Ready To Adopt The Euro? A Generalized Purchasing Power Parity Approach," Manchester School, University of Manchester, vol. 79(3), pages 429-454, 06.
  7. Spahn, Peter, 2012. "Integration durch Währungsunion? Der Fall der Euro-Zone," FZID Discussion Papers 57-2012, University of Hohenheim, Center for Research on Innovation and Services (FZID).
  8. Jean-Sébastien Pentecôte & Maryline Huchet-Bourdon, 2009. "Shock asymmetries and distance to the Euro Area," Post-Print hal-00730072, HAL.
  9. Heinz Handler, 2013. "The Eurozone: Piecemeal Approach to an Optimum Currency Area," WIFO Working Papers 446, WIFO.
  10. Sofia Gouveia & Leonida Correia, 2008. "Business cycle synchronisation in the Euro area: the case of small countries," International Economics and Economic Policy, Springer, vol. 5(1), pages 103-121, July.
  11. Lars Jonung, 2004. "The Political Economy of Monetary Unification: The Swedish Euro Referendum of 2003," Cato Journal, Cato Journal, Cato Institute, vol. 24(1-2), pages 123-149, Spring/Su.

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