engleski

Optimal Monetary Zone

In the 1990s, plans for the formation of the European Economic and Monetary Union (EMU) led to a renewed interest in the empirical and theoretical study of optimal currency areas (OCA) in Western Europe, North America and partly in European transitional countries expecting to join the EU and the EMU. The EMU as a complex and long lasting project was realized successfully. In spite of this there are specific theoretical and especially practical aspects related to its monetary and exchange rate policies which are still a matter of research and various concerns. Different, often negative comments on European Central Bank (ECB) policy regarding the euro exchange rate development reflect practical and conceptual concerns related to the stability and future effectiveness of the EMU. Such concerns are often connected both to the EU enlargement and its expected impacts on the effective performance of the EMU in the future (Maloney and Macmillen, 1999). Towards the end of last century the growing economic integration in North America in the wake of the North American Free Trade Agreement (NAFTA) introduced some concerns about economic performance and eventually negative integration&#8217 ; s impacts on trade balance in the USA, together with some criticism of the conduct of monetary policies especially in the case of Canada. Some experts started to question the merits of flexible exchange regime and some research on potential impacts of common currency with the United States was performed. Awarding Mr. Mundell, the founder of the &raquo ; optimal currency area concept&laquo ; , with the Noble Prize in 1999, additionally heated research and debates on the issues of the OCA concepts. To shed some light on these topics, this paper surveys ideas that have been developed, both to formalize the basic concepts presented in the traditional OCA literature and to evaluate their relative importance in relation to economic specifics of new states and territories. We will specifically focus on the conceptual criteria for successful functioning of an optimal currency area and on specific aspects of actual working and enlarging of the EMU.

Optimal currency area; EMU; enlargement; NAFTA

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