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European Economic and Monetary Integration, and the Optimum Currency Area Theory

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  • Francesco Paolo Mongelli

Abstract

This essay follows the synergies and complementarities between European Economic and Monetary Union (EMU) and the optimum currency area (OCA) theory. Various advancements in economic theory and econometrics have made it possible to progress from the “early OCA theory†to a “new OCA theoryâ€. The balance of judgements has shifted in favour of monetary union: it is deemed to generate fewer costs and there is more emphasis on benefits. The “endogeneity of OCA†has further strengthened this consideration. Yet there is still no simple OCA test. When EMU made the leap to the Maastricht Treaty, the OCA theory could not deliver clear policy guidance. Plans for EMU went ahead as a follow-up of the Single Market Programme (SMP) with only limited direct input from the OCA theory.

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Bibliographic Info

Paper provided by Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 302.

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Length: 61 pages
Date of creation: Feb 2008
Date of revision:
Handle: RePEc:euf:ecopap:0302

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Keywords: Optimum Currency Area; Economic and Monetary Integration; International Monetary Arrangements; EMU; Mongelli;

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Cited by:
  1. Assoc. Prof. Anca Tãnasie Ph.D & Lect. Rãzvan Tudor Tãnasie PhD, 2011. "An Algorithm Based Approach For Romania’S Road Towards The Euro-Area Membership Status. In Search Of A Suitable Example," Revista Tinerilor Economisti (The Young Economists Journal), University of Craiova, Faculty of Economics and Business Administration, vol. 1(17), pages 133-140, November.
  2. Spahn, Peter, 2013. "Subprime and euro crisis: Should we blame the economists?," FZID Discussion Papers 83-2013, University of Hohenheim, Center for Research on Innovation and Services (FZID).
  3. Anca Tanasie, 2010. "A Brief Evaluation Of Inflation Targeting In Romania Envisaging The Euro Adoption," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 1(38), pages 180-189, May.
  4. Praussello, Franco, 2012. "The Theory of Endogenous Optimum Currency Areas: A Critical Note - La teoria delle aree monetarie ottimali endogene: una nota critica," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 65(1), pages 83-95.
  5. João Rebelo Barbosa & Rui Henrique Alves, 2011. "The Euro Area Ten Years after Its Creation: (Divergent) Competitiveness and the Optimum Currency Area Theory," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(5), pages 605-629, December.
  6. König, Jörg & Ohr, Renate, 2012. "Messung ökonomischer Integration in der Europäischen Union: Entwicklung eines EU-Integrationsindexes," Center for European, Governance and Economic Development Research Discussion Papers 135, University of Goettingen, Department of Economics.
  7. Iulia Andreea Bucur, 2011. "EMU – “Optimum” or “Viable” Currency Area?," Studies and Scientific Researches. Economics Edition, "Vasile Alecsandri" University of Bacau, Faculty of Economic Sciences, issue 16-17.
  8. Soproni, Luminita & Marcut, Mirela, 2013. "Romania, Poland. Two Countries, One Wish: Joining the Eurozone," MPRA Paper 53013, University Library of Munich, Germany.
  9. König, Jörg & Ohr, Renate, 2012. "Messung ökonomischer Integration in der Europäischen Union: Entwicklung eines EU-Integrationsindexes," Center for European, Governance and Economic Development Research Discussion Papers 135, University of Goettingen, Department of Economics.
  10. Péter Halmai & Viktória Vásáry, 2012. "Convergence crisis: economic crisis and convergence in the European Union," International Economics and Economic Policy, Springer, vol. 9(3), pages 297-322, September.
  11. Coulibaly, Issiaka & Gnimassoun, Blaise, 2013. "Optimality of a monetary union: New evidence from exchange rate misalignments in West Africa," Economic Modelling, Elsevier, vol. 32(C), pages 463-482.
  12. Constantinos Alexiou & Joseph Nellis, 2012. "Is the ‘EURO’ a Defunct Currency?," International Journal of Economics and Financial Issues, Econjournals, vol. 2(3), pages 296-303.
  13. 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).
  14. Jacques Pelkmans & Lourdes Acedo Montoya & Alessandro Maravalle, 2008. "How product market reforms lubricate shock adjustment in the euro area," European Economy - Economic Papers 341, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  15. Martin Gächter & Aleksandra Riedl & Doris Ritzberger-Grünwald, 2012. "Business Cycle Synchronization in the Euro Area and the Impact of the Financial Crisis," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 33–60.
  16. Vladimir Gligorov & Anna Iara & Michael Landesmann & Robert Stehrer & Hermine Vidovic, 2008. "Western Balkan Countries: Adjustment Capacity to External Shocks, with a Focus on Labour Markets," wiiw Research Reports 352, The Vienna Institute for International Economic Studies, wiiw.
  17. Puiu, Cristina, 2011. "Optimum currency area: an epistemological view," MPRA Paper 35055, University Library of Munich, Germany.

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