On optimality or non-optimality of the eurozone
AbstractEconomic and Monetary Union is an unprecedented event in the monetary history of Europe. The eurozone since its creation 13 years ago expanded to 17 Member States and functioned relatively smoothly up to the outset of the global financial crisis. Only the severity of the subsequent eurozone crisis showed the actual scale of structural, institutional and governance problems it had. The differences between its core and peripheral regions became more than evident. In the present paper we discuss the optimality of the existing and the enlarged eurozone. Despite of the progress made, eurozone is far away from meeting the OCA criteria. Further enlargements, by increasing the overall internal diversity of the union, are likely to increase the gap. It seems however that even non-optimal monetary unions may function but at a significantly higher costs. In some cases the long term costs could even outweigh the benefits. The nominal convergence criteria are only partially consistent with the OCA theory, they are largely arbitrary and should be modified in the interest of the present eurozone as well as of acceding states.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Economics of European Integration Department, Faculty of Economics, University of Gdansk, Poland in its series Working Papers with number 1201.
Length: 22 pages
Date of creation: Feb 2012
Date of revision:
eurozone; optimum currency area; economic and monetary integration; EMU; Maastricht criteria;
Find related papers by JEL classification:
- F35 - International Economics - - International Finance - - - Foreign Aid
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Luca Antonio Ricci, 1997.
"A Model of an Optimum Currency Area,"
IMF Working Papers
97/76, International Monetary Fund.
- Ricci, Luca Antonio, 2008. "A Model of an Optimum Currency Area," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 2(8), pages 1-31.
- Ignazio Angeloni & AndrÃ© Sapir, 2011. "The international monetary system is changing: what opportunities and risks for the euro?," Working Papers 632, Bruegel.
- Hugh Rockoff, 2000.
"How Long Did It Take the United States to Become an Optimal Currency Area?,"
NBER Historical Working Papers
0124, National Bureau of Economic Research, Inc.
- Hugh Rockoff, 1999. "How Long Did It Take the United States to Become an Optimal Currency Area?," Departmental Working Papers 199910, Rutgers University, Department of Economics.
- Bayoumi, Tamim & Eichengreen, Barry, 1994.
"Monetary and exchange rate arrangements for NAFTA,"
Journal of Development Economics,
Elsevier, vol. 43(1), pages 125-165, February.
- George Tavlas, 1994. "The theory of monetary integration," Open Economies Review, Springer, vol. 5(2), pages 211-230, March.
- Bordo, Michael D. & Jonung, Lars, 2000. "A Return to the Convertibility Principle? Monetary And Fiscal Regimes in Historical Perspective," Working Paper Series in Economics and Finance 415, Stockholm School of Economics.
- Alberto Alesina & Robert Barro & Silvana Tenreyro, 2002.
"Optimal Currency Areas,"
Harvard Institute of Economic Research Working Papers
1958, Harvard - Institute of Economic Research.
- Alberto Alesina & Robert J. Barro & Silvana Tenreyro, 2002. "Optimal Currency Areas," NBER Working Papers 9072, National Bureau of Economic Research, Inc.
- Tenreyro, Silvana & Barro, Robert & Alesina, Alberto, 2002. "Optimal Currency Areas," Scholarly Articles 4553033, Harvard University Department of Economics.
- Michael D. Bordo & Lars Jonung, 1999. "The Future of EMU: What Does the History of Monetary Unions Tell Us?," NBER Working Papers 7365, National Bureau of Economic Research, Inc.
- Kenen,Peter B., 2000. "The International Economy," Cambridge Books, Cambridge University Press, number 9780521644358, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tomasz Brodzicki) The email address of this maintainer does not seem to be valid anymore. Please ask Tomasz Brodzicki to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.