Optimal Currency Area and European Monetary Membership: Economics and Political Economy

2017 ◽  
Author(s):  
Donato Masciandaro ◽  
Davide Romelli
Keyword(s):  
Political Economy ◽  
European Monetary ◽  
Optimal Currency Area ◽  
Currency Area

The Global Political Economy of Exchange Rates

2010 ◽  
Author(s):  
Michael G. Hall
Keyword(s):  
Political Economy ◽  
Exchange Rate ◽  
International Relations ◽  
Exchange Rates ◽  
Exchange Rate Regimes ◽  
The Political ◽  
Field Of Study ◽  
Optimal Currency Area ◽  
Currency Area

The political economy of exchange rates is a scholarly field of study that examines why governments adjust the value of their currencies, choose to have the exchange rate fix or float in its value, or agree or disagree on international rules for the exchange rate. Modern research on this field of study began in the 1970s and has developed several theories to examine these questions over the past decades. Economic theories of exchange rate regimes frequently cite three economic models, the Mundell-Fleming model, optimal currency area theory, and the time-inconsistency problem. International relations theories have focused on the global political economy of regimes, including the role of hegemonic leadership in shaping regimes and resolving disputes, the role of interstate negotiation in the formation and maintenance of regimes. The analysis of negotiation saw contributions from three major traditions of international relations theory: neo-liberalism, realism, and constructivism. Research into second major topic, domestic exchange rate regimes, examines how governments make these decisions. During the 1990s, recognition that governments’ de jure commitment to fixed, floating, or other form of exchange rate did not necessarily correspond to actual practice initiated a new round of research. Scholarly engagements with this puzzle include optimal currency area theory, national interest-based approaches, and national identity-based approaches. There has also been scholarship on the conundrum of de jure v. de facto exchange rate regimes. Another area of research, exchange rate valuation, breaks down into sectoral interest-group approaches focused on production and finance, institutional approaches focused on elections and central bank independence, and some ideational approaches focused on economic and political ideology. Anticipated areas of future research include further development of the political economy of exchange rate valuation regimes; inquiry into the interaction of the spread of populist nationalist movements and exchange rates, leading possibly to more mercantilist valuation policies; and investigation of the length of time governments choose to fix or float their exchange rates.

scholarly journals Endogeneity and Specialization in the European Monetary Union

2015 ◽  
Vol 46 (1) ◽  
pp. 7-40
Author(s):  
Henryk Bąk ◽  
Sebastian Maciejewski
Keyword(s):  
Business Cycle ◽  
Monetary Union ◽  
European Monetary Union ◽  
Global Financial Crisis ◽  
National Income ◽  
European Monetary ◽  
Business Cycle Synchronization ◽  
Member States ◽  
Optimal Currency Area ◽  
Currency Area

Abstract There has been a broad discussion about the viability of the European Monetary Union (EMU) in its present and prospective confines. Generally, the EMU, consisting of 19 countries, is not considered an optimal currency area due to low labor market flexibility, autonomous fiscal policies, and structural differences among its members. Considerations about the endogeneity effect of currency unions lead to the question whether the EMU will become more viable over time. According to the endogenity hypothesis formulated by Frankel and Rose [1996, 2000], a common currency area may gradually become an optimal currency area at some future point (ex post unification), despite not having been an optimal currency area (OCA) prior to (ex ante) currency unification. Currency unification should bring about increased intra-industry trade and greater business cycle synchronization among member states. The most recent literature and analyses presented in this paper suggest that the endogenity effect in the EMU has been frail since its onset. While real convergence between EMU member states has not advanced, divergence in i.a. economic structures, national income and productivity levels is observed. The most important economic mechanisms reinforcing convergence and divergence among monetary union members are presented in this paper. Using recent data and related research results, we show a significant divergence in economic structures, business cycle synchronization and productivity levels among Eurozone members in the last decade. The Krugman sectorial dissimilarity index is applied to measure changes in industrial similarity among member countries and the Hodrick-Prescott filter to estimate business cycle synchronization in the EMU. These divergence tendencies have been strengthened by the global financial crisis of 2008 and persist, calling for reforms and new policies within the EMU.

Leopold Kohr theorist of economic decentralisation

2021 ◽  
pp. 15-19
Author(s):  
Stefano Solari
Keyword(s):  
Political Economy ◽  
Monetary Union ◽  
European Monetary Union ◽  
Theoretical Argument ◽  
European Monetary ◽  
Social Scientists ◽  
Political Studies ◽  
Diseconomies Of Scale ◽  
Rela Tions

The work of Leopold Kohr has attracted attention from social scientists in the field of international political studies, but few political economists have studied his theoretical argument in detail. Few students have tried to unite economic and polit-ical arguments to understand his contribution in a more analytical way. We will argue that Kohr's principal theory (diseconomies of scale) was inherently econom-ic, an attempt to elaborate on the concept of scale in a broader perspective and in a more complex way, including the idea of quality and, in particular, power rela-tions. In this paper, we try to make sense of Kohr's idea of decentralisation by studying his contributions from a political economy perspective. Moreover, con-clusions will be drawn that relate Kohr's view to present-day governance problems in the European Monetary Union, in which actual governance reflects all dangers that this scholar feared.

‘Optimal’ Currency Area: What Does It Mean?

The Euro ◽  
2016 ◽  
pp. 9-21
Author(s):  
Jesper Jespersen
Keyword(s):  
Optimal Currency Area ◽  
Currency Area
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