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The Evolution of Optimum Currency Area Index: Post-crisis Perspective
Kadlecová, Pavlína ; Horváth, Roman (advisor) ; Geršl, Adam (referee)
This paper estimates the determinants of exchange rate variability for 21 developed economies in 1980-1998. The results show that traditional criteria implied by the optimum currency area (OCA) theory, such as business cycle synchronisation, trade linkages and economy size, determine to a large extent bilateral exchange rate variability. Using the ordinary least squares estimation, we compute OCA indices for European economies vis-à-vis Germany and identify countries showing consistently large or little signs of convergence. We find that since 1998, most European developed economies have converged to Germany whether or not they are using the euro, suggesting that structural similarity is not driven solely by monetary integration. Our results from the model estimated by the generalized method of moments suggest that two additional criteria reflecting labour market flexibility and private credit growth are significant in explaining the exchange rate variability and lead to a ranking of countries different from the traditional approach. We find a positive relationship between the OCA indices and GDP decline during the economic crisis of 2008-09, which further supports the view that the OCA index is a useful indicator of the candidates' readiness to join the Euro Area. We apply the results to the...
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The Evolution of Optimum Currency Area Index: Post-crisis Perspective
Kadlecová, Pavlína ; Horváth, Roman (advisor) ; Geršl, Adam (referee)
This paper estimates the determinants of exchange rate variability for 21 developed economies in 1980-1998. The results show that traditional criteria implied by the optimum currency area (OCA) theory, such as business cycle synchronisation, trade linkages and economy size, determine to a large extent bilateral exchange rate variability. Using the ordinary least squares estimation, we compute OCA indices for European economies vis-à-vis Germany and identify countries showing consistently large or little signs of convergence. We find that since 1998, most European developed economies have converged to Germany whether or not they are using the euro, suggesting that structural similarity is not driven solely by monetary integration. Our results from the model estimated by the generalized method of moments suggest that two additional criteria reflecting labour market flexibility and private credit growth are significant in explaining the exchange rate variability and lead to a ranking of countries different from the traditional approach. We find a positive relationship between the OCA indices and GDP decline during the economic crisis of 2008-09, which further supports the view that the OCA index is a useful indicator of the candidates' readiness to join the Euro Area. We apply the results to the...
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Maastricht convergence criteria and their fulfillment by the Czech Republic
Punčochářová, Hana ; Jiránková, Martina (advisor) ; Bartušková, Hana (referee)
Fulfillment of Maastricht criteria is essential in order to enter Eurozone which currently consists of 18 member states. The main objective of this thesis is to assess preparedness of the Czech Republic for adopting common European currency. The thesis is divided into three chapters. The first chapter describes development of monetary integration in Europe and nominal and real convergence criteria. In the second chapter, some thoughts about the possible impact of adopting euro by the Czech Republic are provided. The subject of last chapter is the analysis itself of fulfillment of Maastricht convergence criteria by the Czech Republic through the period from 2010 to 2016. In addition, this chapter describes economic alignment of the Czech Republic with the Eurozone and the acceptance of euro by the Czech Republic.
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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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The economic situation of PIIGS countries before and after accepting the Euro
Schneiderová, Jana ; Štěrbová, Ludmila (advisor) ; Čajka, Radek (referee)
The thesis deals with the economic situation of PIIGS countries - Portugal, Ireland, Italy, Greece and Spain, from 1996 up to the present. The first chapter defines the process of economic monetary integration up to the current economic crisis. On the basis of macroenomic analysis the thesis endeavours to find basic causes of current problems in PIIGS countries and to define an occurence of imbalances and varience among these states and other members of the Eurozone. In the conclusion we can find a comparison of PIIGS countries, an evaluation of their development before and after adopting the Euro and an influence of inflation, exchange rate and other economic factors on inception of divergences within the EMU.
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Analysis of readiness of Czech republic for accepting unified European currency
Straka, Jakub ; Čajka, Radek (advisor) ; Černá, Iveta (referee)
My Bachelor's study called "Analysis of readiness of Czech republic for accepting unified European currency" tries to deal with the issue of Czech republic entering the eurozone. The first part briefly mentions history of European monetary integration. The second chapter describes the Maastricht criteria and tries to measure how much is Czech republic successful in fullfiling these criteria. The following chapter describes the OCA theory, which later generated so called real convergence criteria. Firstly I will mention factors, that have an ability to prevent economic shocks. Secondly I will expand on mechanisms that are able to lower the effects of economic shock. Furthermore I will characterise the readiness of Czech republic for the sole proces of euro entering the circulation. The last chapter will define and compare possible positive and negative efects related to accepting the european currency. In the end I will summarise the fullfilment of both nominal and real convergence criteria.
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Analysis of ready state of the Czech Republic to adopt single European currency
Baštová, Lucie ; Čajka, Radek (advisor) ; Bolotov, Ilya (referee)
The Bachelor's theses "Analysis of ready state of the Czech Republic to adopt single European currency" is dedicated to the Czech Republic's accession to the euro area. In its first chapter, the reader will become familiar with the commitment of the Czech Republic to adopt single European currency which is legally embedded in the Maastricht Treaty. The next part is focused on the fulfilment of the nominal convergence criteria by the Czech Republic. The third chapter analyzes the readiness of the Czech Republic for euro area accession through an evaluation of the cyclic and structural alignment with the euro area. This chapter also describes mechanisms whereupon the Czech Republic would be able to adapt to the euro area countries in the event of the occurrence of asymmetric shocks. The last chapter refers to a strategy that has been created for the purpose of euro adoption in the Czech Republic, to the benefits and risks which can result from this step and to the institutional provision for the single European currency changeover. In conclusion, the attitude of experts on the readiness of the Czech Republic for the euro adoption is summarized and on the possible prospects for accession to euro area.
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Integration state of the Czech Republic to the Eurozone
Krčmařová, Klára ; Čajka, Radek (advisor) ; Sedláček, Jiří (referee)
This bachelor thesis on the theme "Integration state of the Czech Republic to the Eurozone" focuses on the adoption of the euro by the Czech Republic. The work starts with the historical facts of the European Integration and integration of the Czech Republic into Europe. The work also describes the complex development of the Czech Republic from the perspective of all necessary criteria of nominal convergence and indicators of real convergence. In connection with the criteria is also mentioned the Stability and Growth Pact. One chapter is entirely about the Czech readiness to join the Eurozone. Specifically, this work describes the organisational and legislative measures. In conclusion, the work summarizes the possible positive and negative effects of the euro and also outlines the likely evolution and the term of the single currency in the Cech Republic.
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Assessment of preparedness of the Czech Republic for adopting the euro
Pudilová, Jitka ; Sedláček, Jiří (advisor) ; Čajka, Radek (referee)
The aim of this bachelor thesis is to assess the preparedness of the Czech Republic for adopting the euro in terms of both nominal and real convergence. The thesis is divided into three main chapters. The first chapter describes the process of forming the European economic and monetary union. The second chapter deals with individual Maastricht convergence criteria and their fulfillment by the Czech Republic. The third chapter analyses the real convergence of the czech economy to the euro area based on selected criteria.
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