The Experts below are selected from a list of 5583 Experts worldwide ranked by ideXlab platform
Roman Horvath - One of the best experts on this subject based on the ideXlab platform.
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exchange rate variability pressures and Optimum Currency Area criteria some empirical evidence from the 1990s
Applied Economics Letters, 2005Co-Authors: Roman HorvathAbstract:This paper estimates the medium-term determinants of the bilateral exchange rate variability and exchange rate pressures for 20 developed countries in the 1990s. The results suggest that Optimum Currency Area criteria explain the dynamics of bilateral exchange rate variability and pressures, to a large extent.
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exchange rate variability pressures and Optimum Currency Area criteria implications for the central and eastern european countries
2005Co-Authors: Roman HorvathAbstract:This paper estimates the medium-term determinants of the bilateral exchange rate variability and exchange rate pressures for 20 developed countries in the 1990s. The results suggest that the Optimum Currency Area criteria explain the dynamics of bilateral exchange rate variability and pressures to a large extent. Next, we predict exchange rate volatility and pressures for the Central and Eastern European Countries (CEECs). We find that the CEECs encounter exchange rate pressures at approximately the same level as the euro Area countries did before they adopted the euro.
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Optimum Currency Area Indices - How Close is the Czech Republic to the Eurozone?
2003Co-Authors: Lubos Komarek, Zdenek Cech, Roman HorvathAbstract:In this paper we provide a survey of the Optimum Currency Area theory, estimate the degree of the explanatory power of the Optimum Currency Area criteria, and also calculate the Optimum Currency Area index in the case of the Czech Republic. The results indicate that the traditional Optimum Currency Area criteria to certain extent explain exchange rate variability. Our results may be interpreted as an attempt to assess the benefit-cost ratio of implementing a common Currency for a pair of countries. Our results also suggest that from the point of view of the Optimum Currency Area theory the costs of adopting the euro for the Czech Republic may be relatively low, at least in comparison with other EMU member countries. We conclude that if the European Monetary Union is sustainable, the accession of the Czech Republic should not change it.
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Optimum Currency Area indices evidence from the 1990s
The Warwick Economics Research Paper Series (TWERPS), 2003Co-Authors: Roman Horvath, Lubos KomarekAbstract: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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Optimum Currency Area theory an approach for thinking about monetary integration
The Warwick Economics Research Paper Series (TWERPS), 2002Co-Authors: Roman Horvath, Lubos KomarekAbstract:The Optimum Currency Area (OCA) theory tries to answer an almost prohibitively difficult question : what is the optimal number of currencies to be used in one region. The difficulty of the question leads to a low operational precision of OCA theory. Therefore, we argue that the OCA theory is a framework for discussion about monetary integration. We summarize theoretical issues from the classical contributions to the OCA literature in the 1960s to the modern “endogenous view”. A short survey of empirical studies on the OCA theory in the connection with the EMU and the Czech Republic is presented. Finally, we calculate OCA-indexes for the Czech Republic, EU, Germany and Portugal. The index predicts exchange rates variability from the view of traditional OCA criteria and asseses benefit-cost ratio of implementing common Currency for a pair of the countries. We compare the structural similarity of the Czech Republic and Portugal to the German economy and find that the Czech economy is closer. The results are reversed when the EU economy is considered as a benchmark country.
Michal Skořepa - One of the best experts on this subject based on the ideXlab platform.
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troubles in the euro Area periphery the view through the lens of a simple convergence sensitive Optimum Currency Area index
Czech Journal of Economics and Finance, 2013Co-Authors: Michal SkořepaAbstract:The concept of an Optimum-Currency-Area (or OCA) index has often been used to assess the relative proximity of various pairs of economies to the ideal of an Optimum Currency Area. In this paper, we suggest improving the construction of the index in several ways, primarily by making it sensitive to real income convergence. Estimation for a sample of 31 advanced or late-stage transition economies for the ten-year period prior to the latest financial crisis confirms that the presence of a process of real convergence generally increases the value of the index and thus speaks against adopting a single Currency until the convergence process is largely over. Looking specifically at the position of current peripheral euro Area member economies, the index indicates relatively low preparedness of Greece and Ireland for a common Currency with Germany: in fact, the preparedness of several Central European late-transition economies seems to have been comparable or even better.
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A convergence-sensitive Optimum-Currency-Area index
2011Co-Authors: Michal SkořepaAbstract:A number of authors have used the concept of an Optimum Currency Area (or OCA) index to assess the relative proximity of various pairs of economies to the ideal of an Optimum Currency Area. Alas, a significant deficiency of this approach as used so far is that it provides no room for long-term real income convergence - a frequently observed process that can be viewed as a specific type of long-term asymmetric shock. In this paper, a novel way to construct the OCA index is suggested that is sensitive to any real convergence (or divergence) between the two economies under study. Estimation of this convergence-sensitive OCA index for a sample of OECD economies yields an intuitively plausible result: real convergence gains on significance within the OCA index after an initial sample, a group of advanced OECD economies, is broadened with a group of emerging economies. Applied to the 2001-2008 period, the convergence-sensitive index shows a few Central and Eastern European late-transition economies to be better prepared for a common Currency with Germany than several current euro Area members.
Tina Zumer - One of the best experts on this subject based on the ideXlab platform.
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exchange rate regimes of cee countries on the way to the emu nominal convergence real convergence and Optimum Currency Area criteria
2003Co-Authors: Vladimir Lavrac, Tina ZumerAbstract:The paper addresses some issues which are still open in the process of inclusion of CEE countries in the EMU. First, what are the interests of both parties involved (CEE countries and the EU side) regarding the dynamics of the accession of CEE countries to the EMU, and related to this, what is its likely scenario (early or late inclusion in the EMU), taking into account the balance of powers between the two sides. Second, the paper discusses the criteria for measuring readiness of individual CEE countries for joining the EMU. The analysis is focused on the debate on nominal convergence (represented by the famous maastricht convergence criteria) versus real convergence (catching up in economic development). In short, the discussion concentrates on the question whether monetary integration is possible and desirable among countries at a different level of economic development. Finally, special attention is paid to Optimum Currency Area criteria, not only as a theoretical background for monetary integration, but also as an additional insight into the measurement of relative suitability and readiness of individual candidate countries for joining the EMU. As an illustration, the paper attempts to measure some of the Optimum Currency Area indicators for the case of Slovenia, and finds out that Slovenia is relatively quite suitable for joining monetary integration and relatively well prepared for joining the euro Area. In particular, Slovenia is not expected to be exposed to serious asymmetric shocks, once Slovenia joins the EMU.
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accession of cee countries to emu nominal convergence real convergence and Optimum Currency Area criteria
2003Co-Authors: Vladimir Lavrac, Tina ZumerAbstract:Central and Eastern European Countries (CEEC) are expected to become effective members of the European Monetary Union (EMU) after having satisfied a number of criteria which will take them some years to achieve, following their accession to the European Union (EU). According to the official views of the European Commission and the European Central Bank (ECB), monetary integration of CEEC in the euro Area should be a multi- lateral, successive and phased process, leading finally to their adoption of the euro. The paper addresses some issues relating to the suitability and readiness of CEEC with regard to joining EMU. Special reference is made to Optimum Currency Area criteria, not only as theoretical background for monetary integration, but also to provide an additional insight into the measurement of the relative suitability and readiness of individual accession countries to join EMU. As an illustration, the paper attempts to measure some of the Optimum Currency Area indicators for the case of Slovenia, and concludes that Slovenia is relatively suitable and well-prepared to join the euro Area. In particular, Slovenia is not expected to be exposed to serious asymmetric shocks, once the country joins EMU.
Marcia Leon - One of the best experts on this subject based on the ideXlab platform.
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Speculative Attacks on Debts and Optimum Currency Area: A Welfare Analysis ∗
2003Co-Authors: Aloisio Araujo, Marcia LeonAbstract:Traditionally the issue of an Optimum Currency Area is based on the theoretical underpinnings developed in the 1960s by McKinnon [12], Kenen [11] and mainly Mundell [14], who are concerned with the benefits of lowering transaction costs vis-a-vis adjustments to asymetrical shocks. Recently, this theme has been reappraised with new aspects included in the analysis, such as: incomplete markets, credibility of monetary policy and seigniorage, among others. For instance, Neumeyer [15] develops a general equilibrium model with incomplete asset markets and shows that a monetary union is desirable when the welfare gains of eliminating the exchange rate volatility are greater than the cost of reducing the number of currencies to hedge against risks. In this paper, we also resort to a general equilibrium model to evaluate financial aspects of an Optimum Currency Area. Our focus is to assess the welfare of a country heavily dependent on foreign capital that may suffer a speculative attack on its public debt. The welfare analysis uses as reference the self-fulfilling debt crisis model of Cole and Kehoe ( [4], [5]
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speculative attacks on debts and Optimum Currency Area a welfare analysis
2003Co-Authors: Aloisio Araujo, Marcia LeonAbstract:Traditionally the issue of an Optimum Currency Area is based on the theoretical underpinnings developed in the 1960s by McKinnon [12], Kenen [11] and mainly Mundell [14], who are concerned with the benefits of lowering transaction costs vis-a-vis adjustments to asymetrical shocks. Recently, this theme has been reappraised with new aspects included in the analysis, such as: incomplete markets, credibility of monetary policy and seigniorage, among others. For instance, Neumeyer [15] develops a general equilibrium model with incomplete asset markets and shows that a monetary union is desirable when the welfare gains of eliminating the exchange rate volatility are greater than the cost of reducing the number of currencies to hedge against risks. In this paper, we also resort to a general equilibrium model to evaluate financial aspects of an Optimum Currency Area. Our focus is to assess the welfare of a country heavily dependent on foreign capital that may suffer a speculative attack on its public debt. The welfare analysis uses as reference the self-fulfilling debt crisis model of Cole and Kehoe ( [4], [5]
Lubos Komarek - One of the best experts on this subject based on the ideXlab platform.
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Optimum Currency Area Indices - How Close is the Czech Republic to the Eurozone?
2003Co-Authors: Lubos Komarek, Zdenek Cech, Roman HorvathAbstract:In this paper we provide a survey of the Optimum Currency Area theory, estimate the degree of the explanatory power of the Optimum Currency Area criteria, and also calculate the Optimum Currency Area index in the case of the Czech Republic. The results indicate that the traditional Optimum Currency Area criteria to certain extent explain exchange rate variability. Our results may be interpreted as an attempt to assess the benefit-cost ratio of implementing a common Currency for a pair of countries. Our results also suggest that from the point of view of the Optimum Currency Area theory the costs of adopting the euro for the Czech Republic may be relatively low, at least in comparison with other EMU member countries. We conclude that if the European Monetary Union is sustainable, the accession of the Czech Republic should not change it.
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Optimum Currency Area indices evidence from the 1990s
The Warwick Economics Research Paper Series (TWERPS), 2003Co-Authors: Roman Horvath, Lubos KomarekAbstract: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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Optimum Currency Area theory an approach for thinking about monetary integration
The Warwick Economics Research Paper Series (TWERPS), 2002Co-Authors: Roman Horvath, Lubos KomarekAbstract:The Optimum Currency Area (OCA) theory tries to answer an almost prohibitively difficult question : what is the optimal number of currencies to be used in one region. The difficulty of the question leads to a low operational precision of OCA theory. Therefore, we argue that the OCA theory is a framework for discussion about monetary integration. We summarize theoretical issues from the classical contributions to the OCA literature in the 1960s to the modern “endogenous view”. A short survey of empirical studies on the OCA theory in the connection with the EMU and the Czech Republic is presented. Finally, we calculate OCA-indexes for the Czech Republic, EU, Germany and Portugal. The index predicts exchange rates variability from the view of traditional OCA criteria and asseses benefit-cost ratio of implementing common Currency for a pair of the countries. We compare the structural similarity of the Czech Republic and Portugal to the German economy and find that the Czech economy is closer. The results are reversed when the EU economy is considered as a benchmark country.
