An Optimum Currency Area index for the EU10 countries
by Veronika HEDIJA
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JEL classification
- Economic Integration
- Foreign Exchange
Keywords
Economic and monetary union, optimum currency area, euro, optimum currency area index
Abstract
The purpose of this article is to identify, which of the new EU member countries is, in accordance with Optimum Currency Area (OCA) theory, appropriate candidate of the euro area membership. The author uses the OCA index to consider the suitability of monetary union membership. The OCA index is calculated for the EU10 countries and four selected traditional EU member states. The author concludes that, according to the OCA index, the Czech Republic is the best candidate for membership of the euro area. In the period 1999–2009, this amounted better value of the OCA index with the euro area than Austria and the Netherlands. Least suitable candidates are, according to the conclusions of the article, the Baltic countries.