Eurozone non-optimality: An OCA based analysis

Abstract

This paper deals with the reconsideration of crucial Optimum Currency Area (OCA) criteria observing Eurozone (EZ) members in the period 2007-2018. According the aim to highlight key obstacles to EZ optimality, economies are mainly grouped into the core and peripheral countries of the initial 12 EZ members (EZ12), and subsequently joined 7 Emerging European Economies (EZ19). The research is based on descriptive analysis of openness and production diversification, macroeconomic divergences and heterogeneity of EZ members, labor mobility and wage flexibility, as well as political OCA criteria. While EZ was not initially constituted as an OCA, this research has confirmed persistent difficulties in EZ functioning in the (post) crisis period. Macroeconomic divergences between member states, insufficient labor mobility and wage flexibility, as well as the absence of political will towards creation of more efficient fiscal union, are identified as the main challenges of EZ sustainability (English) [ABSTRACT FROM AUTHOR]