Diploma thesis, European Monetary Union, its Development and the Future, deals with the reasons, which ultimately led to the foundation of the later European Union and afterwards the European Monetary Union. The journey, which leads up to the present where we are now, lasted for several decades. The experience with the two World Wars on the European territory was the sufficient reason why the European countries embarked on this common journey. In the first part this thesis offers the insight into the past. In short, the most important historical milestones on this road, leading towards the European, respectively the European Monetary Union, are suggested here. The second part of this thesis focuses on current problems of the European Monetary Union. The individual European macroeconomic indicators are compared with the results obtained overseas, particularly in the U.S.A. and Japan. Ultimately, it appears that the EU in comparison especially with the U.S.A. is lagging behind in some indicators. Another part of the thesis is dedicated to the optimum currency area. Is therefore the European Monetary Union the optimum currency area? A few indicators give again the answer to this question. The resulting values of the indicators show that the European Monetary Union is not the optimum currency area today. The reasons can be found particularly in the political than the economic area. Therefore, there is lots of work waiting for the European politicians, officials, but also ordinary citizens, and it will be only up to them, which way the European Union sets out.

L’utilisation de modèles DSGE, construits à partir de comportements micro-fondés des agents économiques, s'est progressivement imposée aux institutions pour l'analyse macroéconomique du cycle d'affaires et l'évaluation de politiques, grâce à leur cohérence interne. La crise financière récente et la préoccupation que représente la persistance du chômage à un niveau élevé plaident en faveur de modèles qui tiennent compte des ajustements imparfaits de l'offre et de la demande sur les marchés du crédit et du travail. Pourtant, des modèles relativement rudimentaires dans leur représentation de ces marchés, comme celui de Smets et Wouters (2003-2007), reproduisent aussi bien les données que des modèles économétriques usuels. On peut donc légitimement s'interroger sur l'intérêt de prendre en compte ces frictions dans la spécification des modèles théoriques destinés à l'analyse économique opérationnelle. Dans cette thèse, je réponds à cette question en montrant que l'inclusion de mécanismes microfondés, spécifiques aux marchés du crédit et du travail peut modifier très significativement les conclusions obtenues à partir d'un modèle DSGE estimé, tant d'un point de vue positif que normatif. Pour cela, je construis un modèle à deux pays de la France et du reste de la zone euro, avec un reste du monde exogène, et l'estime avec et sans ces deux frictions, en utilisant une approche hayésienne. Par rapport aux modèles existant dans la littérature, je propose deux améliorations à la spécification du marché du travail. Premièrement, suivant Pissarides (2009), le salaire réel moyen est rendu rigide en supposant que seuls les nouveaux employés renégocient leur rémunération. Deuxièmement, le taux de participation sur le marché du travail est rendu endogène et le chômage involontaire, dans le sens où le bien-être des chômeurs est inférieur à celui des employés. L'inclusion de ce dernier mécanisme dans le modèle estimé fera cependant I'objet de travaux futurs.Afin de mettre en évidence les effets des frictions sur les marches du crédit et du travail, je soumets les quatre versions estimées du modèle à plusieurs exercices: une analyse en contributions des chocs structurels pendant la crise. L'évaluation de différentes règles de politique monétaire, la simulation contrefactuelle de la crise sous l'hypothèse d'un régime de change flexible entre la France et le reste de la zone euro et, enfin. la simulation de variante de TVA sociale. / Thanks to their internal consistency. DSGE models, built on microecoc behavor, have become prevalenl for business cycle and policy analysis in institutions. The recent crisis and governments' concern about persistent unemployment advocate for mechanism, capturing imperfect adjustments in credit and labor markets. However, popular models such as the one of Smets and Wouters (2003-2007), although unsophisticated in their representation of these markets, are able to replicate the data as well as usual econometric tools. It is thus necessary to question the benefits of including these frictions in theoretical models for operational use.ln this thesis, I address this issue and show that microfounded mechanisms specifiç to labor and credit markets can significantly alter the conclusions based on the use of an estimated DSGE model, fom both a positive and a normative perspective.For this purpose, I build a two-country model of France and the rest of the euro area with exogenous rest of the world variables, and estimate it with and without these two frictions using Bayesian techniques. By contrast with existing models, I propose two improvements of the representation of labor markets. First, following Pissarides (2009), only wages in new jobs are negotiated by firms and workers, engendering stickiness in the average real wage. Second, I develop a set of assumptions to make labor market participation endogenous and unemployment involuntary in the sense that the unemployed workers are worse-off that the employed ones. Yet, including this setup in the estimated model is left for future research.Using the four estimated versions of the model, I undertake a number of analyses to highlight the role of financial and labor market frictions : an historical shock decomposition of fluctuations during the crisis, the evaluation of several monetary policy rules, a counterfactual simulation of the crisis under the assumption of a flexible exchange rate regime between France and the rest of the euro area and, lastly, the simulation of social VAT scenarios.

Given the growing effect that globalisation and integration has had upon economies and regions, the process of monetary union has become an increasingly topical issue in economic policy debates. This has been driven in part by the experience and successes of the European Monetary Union (EMU), which is widely perceived as beneficial to member countries. The Southern African Development Community (SADC) is an example of a group of countries that has realised that there are benefits that may arise from economic integration. This paper makes use of an interest-rate pass through model to investigate whether the pass-through of monetary policy transmission in ten SADC countries has become more similar between January 1990 and December 2007 using monthly interest rate data. This is done to determine the extent of macroeconomic convergence that prevails within SADC, and consequently establish whether the formation of a regional monetary union is feasible. The results of the empirical pass-through model were robust and show that there are certain countries that have a more efficient and similar monetary transmission process than others. In particular, the countries that form the Common Monetary Area (CMA) and the Southern African Customs Union (SACU) tend to show evidence of convergence in monetary policy transmission, especially since 2000. In addition, from analysis of the long-run pass-through, the results reveal that there is evidence that Malawi and Zambia have shown signs of convergence toward the countries that form the CMA and SACU, in terms of monetary policy transmission. The study concludes that a SADC wide monetary union is currently not feasible based on the evidence provided from the results of the pass-through analysis. Despite this, it can be tentatively suggested that the CMA may be expanded to include Botswana, Malawi and Zambia.

The objective of the study is to establish how original financial integration could be attained in southern Africa in order to attract more foreign investment and develop a financially robust and stable region in the southern part of Africa; also to deal with the challenges, risks and remedies of prospective future financial crises. Financial markets are rapidly integrating into a single global market. Developing countries of various regions are drawn into the process with little choice, and without having sound financial infrastructure and policies in place. It is against this background that countries and regions of global integration choose policies that would benefit their regional economy and avert potential economic shock. The challenges posed to countries and regions by the progressive global integration of financial markets are becoming more urgent by the day. These challenges need to be addressed more effectively, either nationally or regionally, as demonstrated by the 1998 financial turmoil in Asia. Private capital flows are becoming intra regionally concentrated, particularly in the USA, Europe, Asia and Latin America. Be that as it may, failure in one market is likely to have immediate and large regional repercussions. Globalisation also marginalises Africa and other Least Developed Countries (LDC), leaving them more impoverished and with greater disparities in terms of income, GDP and FDI. Regional financial integration has to be efficient and sound in order to prevent or contain currency and capital market crises in the southern African region. This study identifies macro economic challenges and risks associated with financial integration. Recommendations are made about methodologies of addressing these issues in order to realise the benefits of regional financial integration in southern Africa, which could be a building block in realising the dream of an African Monetary Union. The study contributes greatly to the debate around the most appropriate criteria that are to be met by the SADC countries, before monetary integration can become a reality. A comparison of the benchmark macro economic convergence criteria of the EU and of the African Monetary Union is done and the performance of SADC countries is assessed in terms of both sets of benchmarks. Southern African states are found to not even be at a comparable level with regard to the EU targets of 1997. The thesis is also critical to the impact of the political instability in the SADC region on prospective monetary integration. Most importantly, SADC would be at a permanent disadvantage and face a long-run depreciation of its common currency, should it continue to integrate financially at macro economic benchmark levels inferior to those of its major trading partner, the EU. / Thesis (PhD)--University of Pretoria, 2009. / Economics / unrestricted

In conformity with the goal of the African Union to build a monetary union for the entire African continent, one of the goals of the Southern African Development Community (SADC) is the formation of a monetary union with a single central bank. Towards this end certain macroeconomic convergence criteria, which are closely aligned with those used by the European Union (EU), have been set. While empirical research on whether or not SADC would benefit from the formation of a currency union has focused on the optimum currency area criteria, no reference to these criteria is made in the SADC programme. Instead, the SADC approach has been governed by a set of macroeconomic convergence criteria synonymous with those pursued by the European Monetary Union (EMU) prior to its formation. Doubts regarding the future of the EU have recently been raised as a result of debt crises in certain member states, implicitly raising questions about the adequacy of the convergence criteria that were adopted. Accordingly, this study considers the feasibility of establishing a currency union in the SADC region. The proposed convergence criteria are assessed against the theory of optimum currency areas as well as in terms of their adequacy in the light of recent EU experience. In addition, the paper provides a preliminary assessment of the fiscal sustainability of the SADC region by conducting Engle-Granger cointegration tests on the public debt and revenue series for the SADC countries under analysis. It was observed that SADC has made considerable progress towards meeting its macroeconomic convergence criteria in recent years. However, in light of the regions' heavy dependence on commodity exports coupled with recent price fluctuations in this regard, the sustainability of this progress is questioned. Furthermore, a review of the EMU experience to date highlights numerous flaws in its approach and the potential challenges the SADC region should consider in moving forward with its agenda. In essence, the study suggests that almost all the SADC member states are fiscally unprepared for monetary union formation and the recent EMU debt crisis has highlighted the importance of acquiring a state of fiscal sustainability prior to union formation. In addition, it is imperative that the SADC members continue to address issues of product diversification, intraregional trade and political unification, all of which should be governed by a centralised fiscal authoriry.

This diploma thesis deals with the preparation of the two EU Member States, namely Czech Republic and Slovakia, for joining the euro area. The first part briefly describes the formation of the Economic and Monetary Union. The core part lies in the assessment and in the comparison of both states regarding the fulfillment of the criteria for adoption of the single currency. The detailed analysis is focused mostly on the nominal and the real convergence.

The accession to the European Monetary Union is fundamentally changing the role of the Czech national bank. Aim of this work is to describe and evaluate this new role of the CNB in connection with the transfer of its former powers to the ECB. The theoretical part of the work deals with the role of central banking in general, the role of the CNB before the accession to the EMU and the role of ECB in monetary union. The work reviews compliance with the conditions required for the accession to the EMU. Further it focuses on the analysis of CNB monetary policy in recent years, particularly its interest rates policy. In view of the future situation in the field of monetary policy the work draws on the experience of Slovakia after its entry into the euro zone and respondes to the question of whether uniform monetary policy is equally applicable to all member states of the euro area by using the Theory of Optimum Currency Area. The work also analyzes the actions of the ECB and the CNB caused by the current economic crisis.

The diploma thesis identifies and assesses current problems of the European Monetary Union, based on: firstly, theoretic approach which reviews the position of monetary union within the range of alternative exchange rate regimes, secondly, historic approach which explains evolutionary principle in the process of European monetary integration, and thirdly, economic approach which analyses the viability of the euro area by application of the criteria of the optimum currency area theory. Subsequently, the roots and development of today's euro area crisis are described and also future scenarios of development in Greece and entire euro area are briefly outlined. The analysis shows that the European Monetary Union by far does not meet the optimum currency area criteria and thus the euro area is considerably vulnerable to future asymmetric shocks.

Multi-speed European Union is a very up-to-date topic especially in terms of the finance and debt crisis, which deepened the differences between member states' economies. Multi-speed integration is one of the ways how to satisfy the claims of all member states, respect their different socioeconomic conditions and interests and at the same time not to disturb the integration process. The objective of this thesis is to introduce the concept of multi-speed integration from different theoretical points of view, to outline its historical development and assess its positive and negative impacts on the EU as a whole and on Slovakia. The analysis of impacts of the Economic and Monetary Union's multi-speed character on Slovakia is the key part of this thesis. These impacts on Slovakia are both positive and negative, but some of them cannot be categorized in general. In the aggregate the positive impacts prevail.

The introduction of euro in 2002 was considered to be a risky "experiment. Even before its actual existence, many economists have doubted the success of the Economic Monetary Union (EMU) emphasizing the potential costs of such a bold action. The traditional Optimum Currency Area by Mundell (1961), Mc Kinnon (1963) and Kenen (1969) has pointed out the loss of the exchange-rate mechanism and the structural differences among the member states as the main sources of costs within a monetary union. Ten years after the circulation of euro, the ongoing Greek debt crisis has revealed the imperfections of the EMU. Greece has become the "black sheep" of the union, having accumulated unsustainable levels of public debt and deficits that could pose a threat for the future of the Eurozone. It is widely believed that the profligate fiscal policies of the Greek government and the domestic flaws of the Greek economy have played an importan role on the country's debt crisis. However, the impact of Greece's accession to the EMU on the current crisis is still a moot question.