Political integration is still questioned as the CT is stuck in the approval process. Can it be proved that it wouldn't be slightly more economically efficient to drop Slovakia after all, or Portugal, or any individual country? No 915, CEPR Discussion Papers from C.E.P.R. You will be directed to Ronald I. McKinnon’s Papers. Evidence from regional data', CEPR Discussion Paper no. It speculates that there is an optimum geopolitical area … The most important pre-conditions are that the economies should be similarly affected by external shocks and … Europe has been trying to form an optimum currency area (OCA) since the introduction of the euro. Although analyzed in terms of criteria for defining an optimum currency area, we could appreciate that EU fulfils certain criteria established within the theory of the optimum currency area. An Optimum Currency Area (OCA) is a geographical region in which maximise economic efficiency is attained by the entire region sharing a single currency (a monetary union), or by several currencies pegging to each other via a fixed exchange rate. Emin Ertürk, Derya Yılmaz, Işın Çetin, Optimum Currency Area Theory and Business Cycle Convergence in EMU, Handbook of Research on Global Indicators of Economic and Political Convergence, 10.4018/978-1-5225-0215-9.ch004, (67-91), (2016). Thus, Europe remains further than the currency unions of North America from the ideal of an optimum currency area. Words: optimum currency areas, economic and monetary union (EMU), output fluctuations, permanent and transitory shocks.> I. Peter Bofinger () . Efforts are needed on many fronts in order optimality to be achieved for every OCA criterion and in that sense the Euro zone to become an optimal currency area. We find that asymmetric shocks tend to … This paper asks whether Europe is an optimum currency area. Much of the debate on the desirability of a monetary union in Europe has focused on the question of whether Europe can be described as an optimum currency area (OCA). Optimum currency area, a currency area in which the benefits of using a common currency outweigh the costs of individual economies’ giving up their own currencies. An optimum-currency–area index for European countries European Economic Review, 41 (3–5) (1997), pp. The “McKinnon Criterion” states that countries in an optimum currency area should be open to trade and should do so profoundly with one another. The aim of this paper is to assess whether the Euro zone is an optimal currency area. Evidence from Regional Data. I fact-tagged the claim. A variety of measures suggests that labor mobility and the speed of labor market adjustment remain lower in Europe than in the United states. Introduction With the recently announced Brexit coming up, the call from other countries wanting to leave the European Union (EU) has become stronger. Discussion Papers Abstract: In this paper we contrast regional and national data on real exchange rate movements, the growth rates of output and employment, labour mobility and unemployment. Populists in … Trade in goods produced with different labour intensities amounts to indirect labour … An optimal currency area is often larger than a country. The paper makes an. Critical attitudes to the introduction of the common currency in the European Union are based above all on the Optimum Currency Area theories. countries that are very open to trade and trade heavily with each other form an optimum currency area: traded good prices are set worldwide if all goods are traded, domestic good prices must be flexible and the exchange rate does not matter for competitiveness. 761-770 Article Download PDF View Record in Scopus Google Scholar Paul De Grauwe and Wim Vanhaverbeke () . The criteria to determine the optimum currency areas established by Robert Mundell have dominated the majority of the UME debates and the conclusions showed that Europe, made either of 6, 15 or more countries doesn’t represent an optimum currency area, because it … Is Europe an Optimum Currency Area? The judgement is made on the basis of the existing literature and available data for several criteria as a part of the OCA Theory. 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