The Maastricht convergence criteria and economic growth in the EMU

The Maastricht convergence criteria are partially based on the theory of optimum currency areas and costs-benefits analysis of the creation of a single currency area as the EMU foundation. Fulfillment of convergence criteria should be durable, but it requires a certain degree of real convergence between member countries of the monetary union. The analysis of the economic role of the convergence criteria which has been carried out in this paper indicates that its implementation has been an important factor of macroeconomic stabilization for the EMU countries as well as for the countries planning accession to the Union. On the basis of the theory of economics and results of empirical studies we cannot state univocally that the convergence criteria are a barrier to economic growth. Naturally, this problem is controversial, but we can formulate a hypothesis that implementation of convergence criteria is an important factor of macroeconomic stabilization and sustainable economic growth.monetary union, monetary policy, fiscal policy, costs-benefits analysis, single currency, inflation, economic growth, budget deficit, public debt, coveregence criteria

Determinants of Euro against US dollar rate of exchange (USD/EUR) in the long run

The paper is a result of research which aimed to identify the factors determining the USD/EUR rate of exchange and the strength of the influence in the long run. In the research we used the Frenkel - Bilson model and an econometric model built on its basis. In the research we formulated a hypothesis that the USD/EUR rate of exchange is determined in an economic and statistically significant way by the following factors: M1 and M2 money supply in the euro area and USA, changes in the GDP rate of growth in the euro area and USA, changes in long term treasury bond yield to maturity in the euro area and USA. The results of the research confirmed the above hypothesis.peer-reviewe

Financial and fiscal crises, prices and EUR/USD rate of exchange

Purpose: The purpose of this paper is to answer the following question: How did the standard and non-standard ECB policy measures influence the price level and the EUR/USD rate of exchange in the period 2008 -2013? Design/methodology/approach: We formulated the following hypothesis: Depreciation of the Euro versus American dollar exchange rate occurred in the period of financial and fiscal crisis (2008-2014). The main reasons for that included: fiscal crisis in the euro area, implementation of standard and non–standard (quantitative easing) ECB monetary policy measures and growth of money supply in the euro area. In that period, the economically and statistically significant impacts of money supply aggregate M2 and differences between interest rates and rates of inflation in the euro area and USA on changes in EUR/USD rate of exchange were noted. For verification of our hypothesis we used econometric modeling - model of regression estimated using the GARCH (0.1), using the monthly data for the period 1999:01-2013:12. Results of our research confirmed the hypothesis formulated by us. Findings: Our study confirmed the formulated hypothesis; the EBC monetary policy, both standard and non-standard, in the years 2008-2014 had a significant effect on the EUR/USD exchange rate, contributing largely to the depreciation of the euro in the same period. Research limitations/implications: The same method of research could be applied to other cases of currency area and central bank monetary policy. Originality/value: The results support the existence of statistically and economically significant impact of central bank policy on the rate of exchange, by the expansion of money supply, changes of differences between interest rates and rates of inflation inside and outside the currency rate area. Those results confirm conclusion formulated based on the theory of interest rate parity and assets theory of currency rates