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Analysis of the Economic and Monetary Union crisis based on the Eurozone example
Ševčíková, Michaela ; Rovná, Lenka (advisor) ; Debnárová, Ľubica (referee)
Global economic and financial crisis uncovered serious structural deficiencies of the EU economies - especially of the Eurozone members. High levels of debt have resulted in inability to honour it and state bankruptcies or necessary debt restructurings are a real possibility. This paper analyzes the current Eurozone crisis on the basis of theoretical and methodical foundations of the Optimal Currency Area literature and theory of economic integration. It evaluates the rationality of the Maastricht nominal convergence criteria and analyzes the role of real convergence criteria in like with the introduction of common currency and common monetary policy. It discusses the non-compliance with the Stability and Growth Pact which was supposed to ensure fiscal discipline also after a country's Euro accession. It also deals with the current developments in the monetary and fiscal crisis of the most affected Eurozone members (Greece, Ireland, Portugal) which have already had to ask for financial aid from the EU and the IMF. Tools and measures adopted in this light by the EU and other national and supra-national authorities are also discussed and their partial evaluation is presented. The final section offers possible alternatives of future development of the Eurozone.
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Analysis of the Impact of Common Currency on the International Trade within the Member Countries of the European Union
Křapáček, Tomáš ; Chytilová, Helena (advisor) ; Mirvald, Michal (referee)
The aim of this thesis is to confirm and consequently quantify the impact of common currency on the size of bilateral trade flows within the member countries of the European Union with the help of gravity model of international trade. The hypothesis of anticipated positive effect was confirmed, whereas performed regression analysis has provided constant estimations of impact of the euro on the size of international trade, which - assuming ceteris paribus - ranged in the interval from 13.6 to 16.3%. Data set tracked the flow of goods of 378 business partners in the period between 2001-2014 providing a very detailed analysis in this specific area, which, according to my knowledge, is missing in the current EU space. At the same time the so-called Lindner's hypothesis was confirmed. This hypothesis together with a new theory of trade helped to identify a model that speaks in favor of monopolistic competition and exchanges with differentiated products.
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Czech Republic and the adoption of euro on the background of macroeconomic imbalances
Caletka, Petr ; Bič, Josef (advisor) ; Žamberský, Pavel (referee)
This work is aimed to determine whether the Czech Republic is ready to enter to the third stage of European economic and monetary union which is associated with the adoption of the euro, and that regarding the fulfillment of the formal entry criteria and also in terms of alignment of the Czech economy with the rest of the eurozone. On that basis evaluate whether it is advantageous for the country to adopt the euro. The first part introduces the different stages of regional integration, as well as the theory of optimum currency areas and economic governance in the European Union. The second chapter is devoted to evaluate the readiness of the Czech Republic to join the euro zone from three perspectives. First, fulfillment of nominal convergence criteria is evaluated. Real convergence and macroeconomic imbalances within the euro area are assessed using cluster analysis. The second approach is to analyze whether EMU constitute an optimal currency area. At the end the experience, of three countries of the eastern enlargement, with changeover to a common currency are presented.
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Is Eurasian union suitable for single currency?
Štekr, Václav ; Melcher, Ota (advisor) ; Čajka, Radek (referee)
The aim of this thesis is to give an opinion on whether states of the Eurasian Economic Union (EEU) are suitable for adopting the common currency. The criteria of optimum currency area (OCA) are used for the assessment. The theoretical part briefly describes economic integration and monetary union. The main attention is paid to the theory of optimum currency area and the definition of the individual criteria. The analytical part of the thesis first defines the surveyed region and then applies the OCA criteria defined in the theoretical part on the individual EEU countries. As a main method of study was used comparative analysis.
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Czech Republic and the optimum currency area criteria
Kadlecová, Pavlína ; Plchová, Božena (advisor) ; Kopecký, Jan (referee)
The goal of this bachelor thesis is to use the theory of optimum currency area to assess whether the Czech Republic is prepared to enter the Eurozone. Comparing the costs and benefits of monetary integration, this theory establishes economic and political criteria that should be met by the participating countries in order to assure that giving up the possibility to devaluate currency is still beneficial. In terms of labor mobility, the Czech Republic is far behind the Eurozone's average, but the future prospects remain positive. The degree of production diversification does not speak in favour of an early adoption of the euro either. Czech industry is too dependent on the machinery sector, which translates into a significant risk of asymmetric shocks. On the other hand, the Czech Republic performs better than most euro countries with regard to the degree of economic openness. Strong business links with Germany reduce the effectiveness of currency devaluation, making the Czech Republic a good candidate to enter the EMU. For such ambiguous cases, the theory recommends creating a system of fiscal transfers, which would allow countries to compensate for the negative effects of economic shocks. Consequently, the best approach for the Czech Republic seems to be achieving stronger real convergence and deeper political integration.
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The Eurozone Crisis from the Perspective of the Theory of Optimum Currency Areas
Sýkora, Filip ; Němcová, Ingeborg (advisor) ; Žamberský, Pavel (referee)
The goal of this diploma thesis is to examine whether the theory of Optimum Currency Area (OCA) confirms the view that the economies of southern and northern member states of the European Economic and Monetary Union (EMU) display different economic characteristics. The thesis strives to answer whether a hypothetical separation of current EMU into two separate monetary blocks makes sense from the perspective of the theory of OCA. First, the thesis examines the evolution of the theory of OCA with a special focus on suggested criteria and their usefulness for the analysis of hypothetical break-up of EMU. These criteria are subsequently divided into economic and political criteria and into centrally fulfilled and separately fulfilled criteria. The thesis then examines how the member states of the EMU cope with the proposed criteria.
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Analysis of real convergence of selected new member countries of the Eurozone
Polakovič, Martin ; Vostrovská, Zdenka (advisor) ; Misic, Viktorija (referee)
This diploma thesis deals with the problem of real convergence of new member countries of the Eurozone. Development in recent years in Europe has clearly shown that monetary union is suitable only for homogenous group of countries. The main aim of the thesis is to analyze the progress of convergence in Slovakia, Slovenia and Estonia after the year 2000 and answer the question which country was best prepared to join the monetary union. Used method of investigation is analysis of historical time series and regression analysis. Main conclusion of the thesis is that highest level of convergence was achieved in Slovenia, but the country with lowest cost of joining Eurozone was Estonia. In final part of the thesis is presented own forecast of future development of real convergence until the year 2030. Theoretical background of the prognosis is based on Solow's growth model and resulting theory of convergence.
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Je Eurozóna ekonomickou chybou? Přístup teorie optimálních měnových zón
Drobík, Michal ; Petrášek, František (advisor) ; Mládek, Josef (referee)
The diploma thesis is aimed to apply the theoretical concept of optimum currency areas, i.e. probably the most comprehensive approach to analyze the suitability of establishing a currency area, to the real and currently difficulties solving environment of EMU states. The first, theoretical-methodological part shows the development of the OCA theory, as founded by Robert A. Mundell and expanded upon by further contributors and critics thereafter. This part focuses especially on defining the optimality criteria, which are then analyzed in the empirical-analytical section. In order to assess the level of optimality, which the euro area members have reached during the common currency existence period, concrete and empirical data are analyzed - data, showing the previous development of the selected indicators, describing the criteria fulfilling. In the final part of the thesis, the author considers the overall optimality rate of euro area and points out its consequences for the Czech Republic, as a candidate country. Furthermore, the entry-timing question is discussed as well, when finished by a two possible scenarios of our accession to EMU. In relation to this issue, the author also discusses the relevancy to assess the readiness for entering the euro area according to the parameters of Maastricht criteria.
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NORTH VS. SOUTH OF THE EURO AREA IN TERMS OF OCA
Hlavová, Kristýna ; Dočkal, Dalibor (advisor) ; Urban, Luděk (referee)
This study divides the eurozone countries into two groups, the first group is "North states" and the second "South states". These two parts are mutually compared and evaluated in terms of the optimum currency area (OCA) theory. The beginning of this work introduces the basic concepts and the history of the OCA theory and the euro area. The theoretical part focuses on the definition and explanation the OCA criteria. The eurozone will be evaluated in terms of fulfillment or non-fulfillment of these criteria. The main aim of this work will be to decide which of these two parts of the euro area to a greater extent fulfills OCA criteria and which of them has a greater potential to become an optimum currency area in the future. The analysis will be based on the available statistical data.
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