Horváth, Roman (Graduate student at Central European University, Hungary and Faculty of Social Sciences, Charles University) Komárek, Luboš (Advisor to Bank Board Member, The Czech National Bank, Prague, Assistant Professor at University of Economics Prague,)
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In this paper the authors calculate OCA-indexes for industrial countries in an effort to estimate the benefit-cost ratio of adopting a common currency. The results correspond to the estimation of Bayoumi and Eichengreen (1997b) and show that the ranking of the economies suitable to form a monetary union stays the same in the 1980s as well as in the 1990s. In other words, the economies, which were structurally close to each other in the 1980s, remain close in the 1990s and the opposite is valid for the structurally different economies. This empirical estimation also does not provide evidence for views, which emphasise the seemingly striking difference between the core and the periphery of the European Union. The authors perform also an estimation of the same index by including the Czech Republic and find no support for the view that the economy of the Czech Republic could possibly structurally differ more than the EMU member countries between each other. Then they conclude that if the EMU is sustainable, the accession of the Czech economy should not change it.
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Find related papers by JEL classification: E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles 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 F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
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