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Topic: Optimum currency area

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	Optimum currency area - Wikipedia, the free encyclopedia
		In economics, an optimum currency area (OCA), also known as an optimal currency region (OCR), is a geographical region in which it would maximize economic efficiency to have the entire region share a single currency.
		Some economists have argued that the United States, for example, really consists of two optimal currency areas and that the United States should have two currencies, one for the western half and one for the eastern half.
		The theory of the optimal currency area was pioneered by economist Robert Mundell.
	en.wikipedia.org /wiki/Optimal_Currency_Area (532 words)

	Currency - Wikipedia, the free encyclopedia
		Currencies can be classified as either floating currencies or fixed currencies based on their exchange rate regime.
		Currency evolved from two basic innovations: the use of counters to assure that shipments arrived with the same goods that were shipped, and the use of silver ingots to represent stored value in the form of grain.
		It was with Archimedes' principle that the next link in currency occurred: coins could now be easily tested for their fine weight of metal, and thus the value of a coin could be determined, even if it had been shaved, debased or otherwise tampered with (see Numismatics).
	en.wikipedia.org /wiki/Currency (2700 words)

	[No title]
		The main idea about an optimum currency area was that the exchange rate adjustment is needed only to pursue different monetary policies in two or more countries which have considerable factor mobility (capital and labor) and a high degree of openness to international trade in a larger area where these countries belong.
		In a currency area comprising different countries with national currencies, the ratio of employment in deficit countries is set by the willingness of surplus countries to inflate.
		In this context a currency area might be defined as a region (having the same economic structure) with one or several currencies whose relative values are fixed mostly in a permanent way but whose common external exchange rate is flexible and determined by the market free from official intervention (Grubel, 1970).
	www.unipa.it /aispe/papers/Marino.doc (16242 words)

	YER - Optimum Currency Areas (Site not responding. Last check: 2007-10-18)
		In his paper titled “A Theory of Optimum Currency Areas” he defines a currency area as “a domain within which exchange rates are fixed.” The definition by itself does not perhaps capture the full complexity of the idea.
		An optimum currency area can comprise multiple countries or it can be a region within a country — the size and the boundaries of the area depend on the optimality of conditions to have a fixed exchange rate in the region and a flexible exchange rate with the rest of the world.
		This implies that the optimum currency area is a region.
	www.yaleeconomicreview.com /issues/spring2006/currency.php (2892 words)

	EUABC A dictionary on words related to the EU
		The economic theory that currencies should operate in an area that is sufficiently similar throughout (homogeneous) to provide a stable basis for that currency.
		Long-established stable states are generally regarded as ideal currency areas because they tend to be roughly similar throughout (homogenous) and possess all the tools for economic policy-making.
		The Euroland is not yet an optimum currency area, and the EU has only the power (competence) to organise monetary policy – i.e.
	www.euabc.com /?word_id=758 (124 words)

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		Most currencies were allowed to fluctuate above or below their central rate by 2.25 percent although the original band for the Italian lira and the bands for the Spanish peseta and the Portuguese escudo allow for fluctuations of 6 percent in either direction from the central parity.
		A common currency also forces countries to give up their independence with regards to monetary policy (at least those countries which are not at the "center" of the system).
		The facts that the EU is probably not an optimum currency area, that economic union is so far in front of political union, that EU labor markets are very rigid, and that the SGP constrains fiscal policies will all present challenges to Europe’s economy and to its policymakers in the years ahead.
	www2.hawaii.edu /~gangnes/imch20.doc (2450 words)

	Robert Mundell's "Optimum Currency Areas" -- Don Roper
		The 1999 Nobel Prize in Economics was given to Robert Mundell, in considerable part for his work, Optimum Currency Areas, which is often credited with the theoretical background for the development of the Euro.
		Having set out a theory of optimum currency areas in the early 'sixties, he began to consider the world as the optimum currency area by the late 'sixties.
		Milton Friedman's chief criterion (as opposed to Mundell's strictly economic criteria) for a successful currency union, viz., a common language, the CFA zone is a more natural currency area than Western Europe.
	www.colorado.edu /econ/courses/roper/money/opt-currency-areas (1051 words)

	OPTIMUM CURRENCY AREAS
		There was not much to report on optimum currency areas, except that I tried--unsuccessfully as it turned out--to get the Fund to address the optimum currency area issue in the case against flexible exchange rates that the staff was preparing for its 1962 Annual Report.
		In terms of this argument alone, the optimum currency area is the world, regardless of the number of regions of which it is composed.
		The key element in a currency board system is that the exchange rate is kept fixed within narrow or zero margins and that the peg can be changed only by parliamentary or constitutional changes that can only be negotiated with considerable difficulty, thus generating confidence in the continuation of the system.
	www.columbia.edu /~ram15/eOCATAviv4.html (8029 words)

	The Globalist \| Global Economy -- Britain and the Euro – Just Say No?
		Broadly speaking, economists refer to an optimum currency area when business cycles across that area are relatively synchronized.
		The reason is that it acts as adjustment mechanism in an area that shares a common currency.
		Labor mobility means that, during times of economic distress in one region or country, some portions of the growing pool of unemployed should be moving to countries with rapid growth and emerging labor shortages.
	www.theglobalist.com /DBWeb/printStoryId.aspx?StoryId=3239 (1458 words)

	Is East Africa an Optimum Currency Area?
		The paper investigates whether the East African Community, comprising of Kenya, Tanzania, and Uganda, constitutes an optimum currency area or not.
		The paper employs the Generalised Purchasing Power Parity method, and various criteria suggested by the theory of Optimum Currency Areas to investigate the optimality of the Community as a currency area.
		While the various indices that we calculated based on the theory of Optimum Currency Areas gave mixed verdicts, the Generalised Purchasing Power Parity (G-PPP) method supports the formation of a currency union in the region.
	www.handels.gu.se /epc/archive/00001365 (194 words)

	[No title] (Site not responding. Last check: 2007-10-18)
		This would be the case when the usefulness of domestic currency as a unit of account and/or medium of exchange is impaired by inflationary tendencies.
		If the currency is let to depreciate in fast-growing countries, the trade deficit will be eliminated without costly corrections through aggregate demand and output.
		The introduction of a single currency (stage 3b) leads to an increase in the incidence of benefits for 3 reasons: (i) exchange rate uncertainty is eliminated; (ii) transaction costs are avoided; and (iii) the scope for accommodating monetary policy is removed (hence, the credibility problem is resolved).
	www.gre.ac.uk /~um03/postgrad/Monetaryinteg/lecture7.doc (2345 words)

	A Fistful of Euros: The World As Optimum Currency Area?
		Mundell’s theory of optimum currency areas deals mainly with ’asymmetric real shocks’, that is a demand shift of the assumed only product of region A to the only only good produced in region B.
		In a currency union such a demand shock has the effect of causing unemployment in region A and inflation in region B because a common monetary policy can only accommodate either the macroeconomic needs of region A (monetary expansion) or region B (monetary contraction).
		Thus, while it is inherently difficult to determine an optimum, any currency area is a trade-off of regional macroeconomic policy independence and gains from reduced transaction costs made possible by a single currency - the more tightly two economies are intertwined, the higher the gains from monetary integration.
	fistfulofeuros.net /archives/001094.php (1384 words)

	Optimum Currency Area (Site not responding. Last check: 2007-10-18)
		The debate on EMU has been very influenced by the traditional theory of optimum currency areas (OCAs).
		The Endogeneity of the Optimum Currency Area Criteria.
		From the standpoint of these factors, the optimum currency area is the world.
	www.dbsfinman.com /optimum_currency_area.htm (156 words)

	Currency - Optimum Currency (Site not responding. Last check: 2007-10-18)
		Jarko Fidrmuc: The Endogeneity of optimum currency area criteria,...
		Quickjump < > Professor Robert Mundell, 1999 Nobel Laureate: the father of the Theory of Optimum Currency Areas.
		The Endogeneity of the Optimum Currency Area Criteria Jeffrey A. The Endogeneity of the Optimum Currency Area Criteria Jeffrey A. Frankel and Andrew K. Rose* REVISED DRAFT: 24 September 1997 Abstract A country...
	www.foreigncurrencynow.net /optimumcurrency (189 words)

	SUOMEN PANKKI - BANK OF FINLAND, BOFIT - phone +358-9-1832268 email bofit@bof.fi (Site not responding. Last check: 2007-10-18)
		This paper tests an endogeneity hypothesis of optimum currency area (OCA) criteria (Frankel and Rose, 1998) on a cross-section of OECD countries between 1990 and 1999.
		As far as intra-industry trade is positively correlated with trade intensities, this result confirms the OCA endogeneity hypothesis.
		The endogeneity of OCA linkage criteria implies extensive business cycle harmonization between CEECs and EU countries in the medium term.
	www.bof.fi /bofit/eng/6dp/abs/dp0801.stm (121 words)

	Economic Survey of the Euro Area 2004 (Site not responding. Last check: 2007-10-18)
		The OECD assessment and recommendations on the main economic challenges faced by the Euro area are available by clicking on each chapter heading below.
		The key challenges for economic policy are: to raise economic growth and resilience to shocks; to foster cohesion among countries and regions; and to ensure sustainable public finances.
		Swift inter country adjustment is crucial for the area’s resilience.
	www.oecd.org /document/39/0,2340,en_2649_201185_33618087_1_1_1_1,00.html (296 words)

	S-WoPEc: Economic Structure and the Decision to Adopt a Common Currency
		Abstract: Everyone studying EMU cites the theory of Optimum Currency Areas: whether a country like Sweden should join the currency union depends on such parameters as the extent of Swedish trade with other EU members and the correlation of Sweden’s income with that of other members.
		Sweden could fail the OCA criterion for membership today, and yet, if it goes ahead and joins anyway, could, as the result of joining, pass the Optimum Currency Area (OCA) criterion in the future.
		The few economists who have identified the importance of the endogeneity of trade patterns and income correlation are divided on the nature of the relationship between the two.
	swopec.hhs.se /iiessp/abs/iiessp0611.htm (424 words)

	The Endogeneity of the Optimum Currency Area Criteria, Intra-industry Trade, and EMU Enlargement -- Fidrmuc 22 (1): 1 ...
		The Endogeneity of the Optimum Currency Area Criteria, Intra-industry Trade, and EMU Enlargement -- Fidrmuc 22 (1): 1 -- Contemporary Economic Policy
		The Endogeneity of the Optimum Currency Area Criteria, Intra-industry Trade, and EMU Enlargement
		area (OCA) criteria in a cross-section of OECD countries in
	cep.oxfordjournals.org /cgi/content/abstract/22/1/1 (152 words)

	Ever Closer to Heaven? An Optimum-Currency-Area Index for European Countries
		In this paper we develop a procedure for applying the core implications of the theory of optimum currency areas to cross-country data.
		The relationship between the characteristics of countries to which OCA theory points and the observed behavior of exchange rates seems sufficiently stable and robust to support simple forecasting.
		Extrapolating the independent variables, we therefore use our exchange rate equations to predict which countries will be best able to support stable exchange rates in the future -- equivalently, which are likely to be best prepared to be among the founding members of Europe's monetary union.
	repositories.cdlib.org /iber/cider/C96-078 (169 words)

	AEH: EUR.MONEY: The Endogeneity of Optimum Currency Area Criteria - Lessons from History for European Monetary Union (Site not responding. Last check: 2007-10-18)
		The current pattern of relative wage rigidity and labour inertia in Europe is thus viewed by many observers as a problematic factor in the successful functioning of the European common currency area.
		We investigate in the context of some historical case studies whether monetary integration can bring about a regime shift in the degree of labour market flexibility.
		Subject: H Geographical Area: 4 Country/Region: Time Period: 0 ------------------------------------------------------- Visit the library of Abstracts in Economic History or submit your abstract at: http://www.eh.net/abstracts
	www.eh.net /pipermail/abstracts/2003-March/000337.html (268 words)

	AEI - Short Publications
		This question would seem to be of present relevance in the face of the very lackluster economic performance of Germany, Europe’s largest economy, which is presently suffering from the lack of an independent monetary policy to stave off deflation.
		Historic experience suggests that a currency union similar to that of the Euro will only hold together if that union satisfies the criteria of an optimum currency area.
		Among the more important of those criteria are economic homogeneity among members, wage flexibility, labor market mobility, and a system of federal fiscal transfers.
	www.aei.org /publications/filter.economic,pubID.21133/pub_detail.asp (401 words)

	Is East Africa an Optimum Currency Area?
		"Exchange Rate Volatility and Intervention: Implications of the Theory of Optimum Currency Areas," CEPR Discussion Papers 1982, C.E.P.R. Discussion Papers.
		"Exchange rate volatility and intervention: implications of the theory of optimum currency areas," Journal of International Economics, Elsevier, vol.
		"Economic Structure and the Decision to Adopt a Common Currency," Seminar Papers 611, Stockholm University, Institute for International Economic Studies.
	ideas.repec.org /p/hhs/gunwpe/0041.html (570 words)

	Do candidate countries fit the optimum-currency-area criteria? (Site not responding. Last check: 2007-10-18)
		The authors attempt to assess all pros and cons of participation in the monetary union by using the tools of the OCA theory.
		The empirical part of the paper focuses on the OCA criteria using two different approaches.
		The authors conclude that, although there are some differences between the candidate countries and the pre- accession ClubMed countries, these should not prevent the candidate countries from entering the EMU and that efficiency gains can be achieved once the currency union is formed.
	www.eldis.org /static/DOC15065.htm (367 words)

	AEH: EUR.MONEY: The Endogeneity of Optimum Currency Area Criteria in Historical Perspective - some lessons for European ...
		AEH: EUR.MONEY: The Endogeneity of Optimum Currency Area Criteria in Historical Perspective - some lessons for European Monetary Union (EMU)
		Title: The Endogeneity of Optimum Currency Area Criteria in
		the successful functioning of the European common currency area.
	eh.net /lists/archives/abstracts/mar-2003/0003.php (269 words)

	OPTIMUM CURRENCY AREA INDICES: EVIDENCE FROM THE 1990s (SMEALSearch) - Pal,Rangaswamy,Giles,Debnath (Site not responding. Last check: 2007-10-18)
		Optimum Currency Area Indices: Evidence From The 1990s
		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.
	gunther.smeal.psu.edu /29704.html (319 words)

	Optimum Currency Area (Site not responding. Last check: 2007-10-18)
		Please look for Optimum Currency Area, Optimum Currency Areas Theory and Optimal Currency Areas to find more Optimum Currency Area information.
		Find: Optimum Currency Area Indices: Evidence From The 1990s Roman Horvth and Lubos Komrek Warwick Economic Research Papers Department Of...
		The optimum currency area OCA theory tries to answer an almost prohibitively difficult question what is the optimal number of currencies to be used
	www.optimumcurrencyarea.info (369 words)

	[No title]
		Yet, for a country adopted currency board such as Argentina, is there anything further to be lost by giving up its currency altogether?
		Making the transition during a period of tranquility or upward pressure in the currency market.
		However, Mexico in 1994 and Brazil in January 1999 ended up badly by clinging to their exchange rate policies for too long.
	www.business.uiuc.edu /gpinteri/malkoc.ppt (869 words)

	CEPR Discussion Paper Abstracts (Site not responding. Last check: 2007-10-18)
		An optimum currency area is an economic unit composed of regions affected symmetrically by disturbances and between which labour and other factors of production flow freely.
		The symmetrical nature of disturbances and the high degree of factor mobility make it optimal to forsake nominal exchange rate changes as an instrument of adjustment and to reap the reduction in transactions costs associated with a common currency.
		Thus, Europe remains further than the currency unions of North America from the ideal of an optimum currency area.
	www.cepr.org /pubs/dps/DP478.asp (289 words)

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