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Intereconomics

, Volume 48, Issue 5, pp 315–322 | Cite as

The optimum currency area theory and the EMU

An assessment in the context of the eurozone crisis
  • Jennifer Jager
  • Kurt A. Hafner
Optimum Currency Area

Abstract

The eurozone crisis has revealed certain shortcomings of the EMU, such as its vulnerability to asymmetric shocks and its inability to act as predicted by the theory of optimum currency areas. Although the share of intra-EU trade has increased since the introduction of the euro, dissimilarities in economic structure combined with high degrees of industrial specialisation have increased the EMU’s vulnerability to asymmetric shocks. Moreover, the lack of labour mobility or a transfer payment system limits the EMU’s crisis adjustment capabilities. However, most of the implemented and proposed stabilisation measures seek to remedy this vulnerability by promoting economic integration, further fiscal discipline and debt redemption.

Keywords

Euro Area European Central Bank Currency Union Optimum Currency Area Asymmetric Shock 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© ZBW and Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  • Jennifer Jager
    • 1
  • Kurt A. Hafner
    • 1
  1. 1.Heilbronn UniversityHeilbronnGermany

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