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Optimum Currency Areas theory and the Slovak suitability for the euro adoption

Author

Listed:
  • DomeNico Raguseo

    (Economics Faculty (University Matej Bel))

  • Jan Sebo

    (Economics Faculty (University Matej Bel))

Abstract

This paper tests the present readiness of Slovakia to join the European Monetary Union (EMU) based on the classical Optimum Currency Area criteria, the degree of trade intensity and business cycle synchronization. The results do not fully confirm the hypothesis that Slovakia already constitutes an optimum monetary union with the rest of the EMU countries mainly the labour mobility is largely ineffective as adjustment mechanism. But, Slovakia is a open economy, its degree of trade integration is the highest among the Central and Eastern European countries and its economic and production structures are quite similar to the intra-EMU average. Moreover, Slovakia's business cycle appears at least as highly synchronized with the EMU''s one as some present, small and peripheral EMU member countries. This would indicate that this country is equally a suitable candidate for the EMU membership and that the Euro adoption should not increase the likelihood of asymmetric shocks.

Suggested Citation

  • DomeNico Raguseo & Jan Sebo, 2008. "Optimum Currency Areas theory and the Slovak suitability for the euro adoption," Economics Bulletin, AccessEcon, vol. 6(40), pages 1-14.
    • Handle: RePEc:ebl:ecbull:eb-08f40025
    as

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    File URL: http://www.accessecon.com/pubs/EB/2008/Volume6/EB-08F40025A.pdf
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    References listed on IDEAS

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    Cited by:

    1. Peter Sarlin, 2011. "Evaluating a Self-Organizing Map for Clustering and Visualizing Optimum Currency Area Criteria," Economics Bulletin, AccessEcon, vol. 31(2), pages 1483-1495.

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    More about this item

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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