There are four chapters in my dissertation. Chapter one gives a brief introduction of the three essays. Chapter two studies the choice of exchange rate regimes in East Asia using a business-cycle approach. My results suggest that countries in East Asia are driven mainly by country-specific shocks, making more rigid exchange rate regimes less desirable. Neither a yen bloc nor a dollar bloc has been identified in East Asia. However, Japan seems more influential to countries such as Korea and Taiwan. An optimum currency area does not seem feasible for East Asia, at least in the short run. Chapter three applies the cointegration and causality analyses to the real effective exchange rates to study the degree of monetary integration in East Asia. I find that the ASEAN and the NIE countries, respectively, have achieved some degree of integration, but not East Asia as a whole. The yen is found to move closely with the NIE currencies. However, neither the yen nor the dollar imposes a dominant driving force on the East Asian currencies. My results suggest that East Asia is not an optimum currency area. Chapter four expands the traditional monetary model of exchange rate determination into a structural VAR model incorporating various capital flows and the balance of trade in addition to the macroeconomic fundamentals. The model is then applied to the Australian dollar (AUD), the Canadian dollar (CAD), and the US dollar (USD) exchange rates over 19802004. I find that capital flows, especially portfolio investments, explain a major portion of the exchange rate fluctuations in the relatively small and open economies such as Australia and Canada in the short-to-medium run. The impacts of capital flows are limited to the US dollar exchange rates. Among the macroeconomic fundamentals, the interest rate plays an important role in exchange rate determination for all three currencies. The results imply that different capital flows do influence exchange rates differently and are important determinants of exchange rates.

The goal of this diploma thesis is to assess the suitability and readiness of the Slovak Republic to adopt a single European currency. In analyzing the costs and benefits relating to Slovakia?s accession to the EMU, this thesis is guided by the theory of the OCA. The thesis provides a survey of the OCA theory, attempts to measure some of the OCA indicators and calculate OCA index for Slovakia. The results suggest that Slovakia fulfils the necessary condition for joining the monetary union, i.e. it is relatively well aligned with the euro area. The diploma thesis concludes that Slovakia is relatively suitable and well-prepared to join the euro area in 2009.

<p>The purpose of this paper is to study whether Sweden or Finland was initially better suited for the euro, and whether Sweden has benefited from remaining outside the third step of the European Monetary Union as opposed to Finland.  The analysis is based on the optimum currency area theory.  The findings show that Sweden initially was better suited for euro adoption than Finland, but the ECB’s monetary policy has suite Finland quite well.  However, Sweden appears to have benefited from remaining outside the euro.</p>

The purpose of this paper is to study whether Sweden or Finland was initially better suited for the euro, and whether Sweden has benefited from remaining outside the third step of the European Monetary Union as opposed to Finland.  The analysis is based on the optimum currency area theory.  The findings show that Sweden initially was better suited for euro adoption than Finland, but the ECB’s monetary policy has suite Finland quite well.  However, Sweden appears to have benefited from remaining outside the euro.

The objective of this study is to investigate how the development regarding the short-term nominal interest rate in Portugal would have differed from that set by the ECB 1999-2011 in a situation where they did not enter the European Monetary Union. To do this, we use the Taylor rule, which incorporates economic activities such as inflation and output and how these deviates from their target. Constructing the Taylor rule, we estimate its reaction functions using an Ordinary Least Square Regression on annual data from the period 1988-1998. The reaction functions serve as weights on the deviations for inflation and output. The result reached is that the interest rate set by the ECB since 1999 is far below that interest rate required by the Portuguese economic situation. Further, we discuss how the influence in the setting of the ECB interest rate differs considering the member countries size.

The purpose of this thesis is to carry out an empirical investigation into whether membership of monetary union matter in the determination of bank net interest margin. Bank net interest margin is the difference in bank borrowing and lending rates relative to the total interest-earning assets. We operationalise this study by comparing panels of commercial banks within and outside economic and monetary unions in Europe and Sub-Saharan Africa. For our European analysis we use bank-level data from nine Euro Area countries and seven non-Euro Area economies, in a dynamic empirical model, employing Arellano and Bover (1995)/Blundell and Bond (1998) system GMM estimation method. We find that stronger competition and efficiency, as well as greater macroeconomic stability in the Euro Area reduce bank net interest margins more than in the non-Euro Area. We attribute this to the well-developed single market with a strong socio-economic cohesion underpinning rather than the economic and monetary union. We extend the same level of analysis to the Sub-Saharan Africa, where we contrast our findings in the West African Economic and Monetary Union (WAEMU) with those of twenty non-monetary union Sub-Saharan African economies. Our findings in the Sub-Saharan African context reveal a rather different scenario. While the WAEMU enjoys relatively lower net interest margins than its non-monetary union counterparts, this is attributable to the union’s ability to pursue vigorously its primary objective of maintaining price stability by maintaining lower interest rates. Unlike in the Euro Area we do not observe a reducing impact of bank competition and efficiency on bank net interest margin in the West African Economic and Monetary Union (WAEMU) as we do in the non-monetary union Sub-Saharan Africa. We find these results for the Sub-Saharan African analysis puzzling, and attribute it to the absence of a well-developed single/common market which is supposed to drive competition and efficiency with the effect of reducing net interest margins, as it obtains in the Euro Area. Our conclusion is that it is rather the presence of a well-developed single market that engenders competition and efficiency effects to reduce bank net interest margins rather than membership of a monetary union per se.

This work summarizes readiness of the Czech Republic for addoption of common currency euro. It describes the history of common European currency in the first chapter and economic and monetary union in second chapter. The fourth chapter analyzes the fulfillment of Maastricht convergence criteria in the Czech Republic in comparison to Slovenia. The last chapter focuses on the fulfillment of the optimum currency area criteria in these countries

The goal of this diploma thesis is to assess the suitability and readiness of the Slovak Republic to adopt a single European currency. In analyzing the costs and benefits relating to Slovakia?s accession to the EMU, this thesis is guided by the theory of the OCA. The thesis provides a survey of the OCA theory, attempts to measure some of the OCA indicators and calculate OCA index for Slovakia. The results suggest that Slovakia fulfils the necessary condition for joining the monetary union, i.e. it is relatively well aligned with the euro area. The diploma thesis concludes that Slovakia is relatively suitable and well-prepared to join the euro area in 2009.

This diploma thesis deals with the problem of real convergence of new member countries of the Eurozone. Development in recent years in Europe has clearly shown that monetary union is suitable only for homogenous group of countries. The main aim of the thesis is to analyze the progress of convergence in Slovakia, Slovenia and Estonia after the year 2000 and answer the question which country was best prepared to join the monetary union. Used method of investigation is analysis of historical time series and regression analysis. Main conclusion of the thesis is that highest level of convergence was achieved in Slovenia, but the country with lowest cost of joining Eurozone was Estonia. In final part of the thesis is presented own forecast of future development of real convergence until the year 2030. Theoretical background of the prognosis is based on Solow's growth model and resulting theory of convergence.

The goal of this diploma thesis is to examine whether the theory of Optimum Currency Area (OCA) confirms the view that the economies of southern and northern member states of the European Economic and Monetary Union (EMU) display different economic characteristics. The thesis strives to answer whether a hypothetical separation of current EMU into two separate monetary blocks makes sense from the perspective of the theory of OCA. First, the thesis examines the evolution of the theory of OCA with a special focus on suggested criteria and their usefulness for the analysis of hypothetical break-up of EMU. These criteria are subsequently divided into economic and political criteria and into centrally fulfilled and separately fulfilled criteria. The thesis then examines how the member states of the EMU cope with the proposed criteria.