Optimal Currency Areas and the Euro, Volume I

1. Front Matter

   Pages i-xiv

   PDF

2. Introduction

   • Johannes Kabderian Dreyer, Peter Alfons Schmid

   Pages 1-13

3. Literature and Theory

   • Johannes Kabderian Dreyer, Peter Alfons Schmid

   Pages 15-44

4. Empirics

   • Johannes Kabderian Dreyer, Peter Alfons Schmid

   Pages 45-84

5. Discussion

   • Johannes Kabderian Dreyer, Peter Alfons Schmid

   Pages 85-95

6. Back Matter

   Pages 97-119

   PDF

This book analyses business cycles synchronization in the Euro Area (EA), one of the 3 criteria that define Optimal Currency Areas (OCAs). Even before its launch, economists questioned whether the EA has what it takes to become an OCA. The onset of the sovereign debt crisis in 2010 confirmed the challenges relating to its construction. But did the EA change over time, and what key drivers may be necessary in the future to strengthen the common currency?

• Optimal Currency Area
• Euro
• Eurozone Crisis
• Business Cycles Synchronization
• European Economic Integration
• European Currency Area
• Optimal Currency Union
• Capital and Labour Mobility
• Risk Sharing System
• European Stability Mechanism
• Monetary Policy
• GDP
• Bilateral Flows of Bank Assets
• Fiscal Deficit Differentials
• Price Competitiveness Differentials
• financial crises

“A reader-friendly little book full of refereed, but largely the authors own empirical analyses. Some of their results are as expected, others are surprising, and some of them will give rise to controversial discussions. They pose a challenge for proponents and critics of the euro and the institutional arrangements of the EMU. Worth reading for all of them.”

—Dr. Johannes Schneider, Catholic University Eichstätt-Ingolstadt

“A common currency is more desirable the more symmetric are the macroeconomic shocks of its member countries. In their excellent new book, Dreyer and Schmid address this fundamental proposition both theoretically and empirically. They begin with a lucid survey of the macroeconomic consequences of symmetric and asymmetric shocks in the classic theory of optimal currency areas. They then implement the theory empirically to identify exactly which factors contribute to the synchronization of business cycles in the Euro Area. Advocates of theEuro will be relieved to learn that business cycles in the Euro-area are more synchronized than in the United States. They also suggest policies that the Euro-area can implement to strengthen synchronization. The book is well written, uses state-of-the-art econometrics, and has important implications for policy. It should be accessible to researchers, graduate students in economics, and policymakers.”

 —William T. Smith, Ph.D., Department of Economics, University of Memphis

“Dreyer and Schmid present an insightful look into the creation of currency areas with emphasis on the Euro. They discuss factors and conditions necessary for its success and identify areas for improvement. The book is a must read for anyone interested in macroeconomics and currencies, especially academics and policy makers.”

—Vivek Sharma, Ph.D., Department of Economics, University of Memphis

• ISE, Roskilde University RUC, Roskilde, Denmark

  Johannes Kabderian Dreyer

• FOM University of Applied Sciences for Economics and Management, Munich, Germany

  Peter Alfons Schmid

Johannes Kabderian Dreyer is an Associate Professor of Financial Economics at Roskilde University, Denmark.  He earned his bachelor’s degree in Economics and his master’s in Finance at the Pontifical Catholic University of Rio de Janeiro, Brazil. He received his doctorate in Financial Economics from the Catholic University of Eichstätt-Ingolstadt, Germany.

Peter Alfons Schmid is a Professor of Business Administration at the FOM University of Applied Sciences, Germany.  He holds a diploma degree and doctorate from the Catholic University of Eichstätt-Ingolstadt, Germany.  He was a teaching and research assistant, worked as a professional at global and regional accounting firms and developed a tech start-up.

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