Course syllabus TEI - Theory of Economic and Monetary Integration (FBE - WS 2013/2014)


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Course code: TEI
Course title in language of instruction: Teorie měnové integrace
Course title in Czech: Theory of Economic and Monetary Integration
Course title in English: Theory of Economic and Monetary Integration
Mode of completion and number of credits: Exam (6 credits)
(1 ECTS credit = 28 hours of workload)
Mode of delivery/Timetabled classes: full-time, 2/2 (hours of lectures per week / hours of seminars per week)
Language of instruction: Czech
Level of course: master continuing
Semester: WS 2013/2014
Name of lecturer: prof. Ing. Lubor Lacina, Ph.D. (examiner, instructor, lecturer, supervisor, tutor)
Ing. Pavel Žiaran, Ph.D. (examiner, instructor, tutor)
Prerequisites: Intermediate Macroeconomics
 
Aims of the course:
The course introduces basic theory of optimum currency area (monetary union). The historical background of European monetary integration is also briefly described. The core of the course is aimed at analyses of the theory of monetary integration, fiscal policy and the role of European Central Bank within European Monetary Union.
 
Course contents:
1.Theory of Economic and monetary integration (allowance 2/2)
 
a.Steps of economic and political integration in West Europe - from custom to monetary union
b.The influence of EURO introuction on business operations

2.The EU Budget (allowance 4/4)
 
a.Public Finance and European Integration, historical overview
b.Budget Rules, Budget Resources
c.Making Budgets
d.Internal EU Expenditures
e.External EU Expenditures
f.Managing the Finances of Union
g.The Second Financial Arm on the Union: Borrowing and Lending
h.Future of EU Finances

3.The Economics of Monetary Integration (allowance 2/2)
 
a.Costs and Benefits of Monetary Union
b.The Costs of a Common Currency
c.Different Preferences of Countries about Inflation and Unemployment
d.Differences in Labour Market Institutions
e.Differences in Growth Rates
f.Different Fiscal Systems and the Seigniorage Problem

4.The Theory of Optimum Currency Areas: A Critique (allowance 4/4)
 
a.How Relevant are the Differnes Between Countries?
b.Nominal and Real Deprecations of the Currency
c.Devaluation, Time Consistency, and Credibility
d.The Cost of Monetary Union and the Openness of Countries

5.The Benefits of a Common Currency (allowance 2/2)
 
a.Direct Gains from the Elimination of Transaction Costs
b.Indirect Gains from the Elimination of Tranaction Costs
c.Wefare Gains from Less Uncertainty
d.Exchange Rate Uncertainty and the Price Mechanism
e.Exchange Rate Uncertainty and the Economic Growth
f.Benefits of Monetary Union and the Openness of Countries

6.Cost and Benefits Compared (allowance 2/2)
 
a.Monetary Union, Price and Wage Rigidities, and Labour Mobility
b.Asymmetric Shocks and Labour Market Flexibility
c.Costs and Benefits in the Long Run

7.Incomplete Monetary Unios: The European Monetary System (EMS) (allowance 2/2)
 
a.The Credibility Problem
b.The Liquidity Problem in Pegged Exchange rate Systems
c.The EMS During the 1980s
d.The Disintegration of the EMS in 1992-3
e.Credibility of the EMS: A Formal Analysis
f.Disinflation in the EMS
g.The EMS and the Recession of 1992-3
h.The EMS since 1993

8.The transition to a Monetary Union (allowance 2/2)
 
a.The Maastricht Treaty
b.Why Convergence Requirements?
c.Problems with the Maastricht Streategy
d.Alternative Transition Scenarios
e.The Political Economy of Monetary Union in Europe
f.Suggestion for a Different Approach

9.The Design of a European Central Bank (allowance 2/2)
 
a.The Design of the ECB
b.Political Independence and Inflation
c.The Design of the ECB: Further Issues

10.Fiscal Policies in Monetary Unions (allowance 3/3)
 
a.Fiscal Policies and the Theory of Optimum Currency Areas
b.Sustainability of Government Budget De
c.The Argument for Rules on Government Budget Deficits
d.Fiscal Discipline in Monetary Unions
e.Risks of Default and Bailout in a Monetary Union
f.The Stability Act: An Evaluation

11.Entrance of new members to EMU (allowance 3/3)
 
a.Potential scenarios
b.How to Fix the Conversion Rates
c.How to Make Irrevocably Fixed Exchange Rates Credible?
d.The Parallel Currency Approach to Monetary Unification
e.How to Organize Realtions between the "Ins" and "Outs"?

 
Learning outcomes and competences:
Generic competences:
 
-ability to analyse and synthesize
-ability to solve problems
-ability to work in international context
-ability to work independently
-capacity to adapt to new situations
-communication in second language
-science and research skills

Specific competences:
 
-Ability to predict future changes of basic macroeconomic indicators
-Student study the main thesis of the optimum currency area theories
-To accommodate their decisions to the recent changes in international economic policy
-Understanding to the basic principles of monetary policy decision making process

Type of course unit: required
Year of study: Not applicable - the subject could be chosen at anytime during the course of the programme.
Work placement: There is no compulsory work placement in the course unit.
Recommended study modules: -
 
Learning activities and study load (hours of study load):
Type of teaching methodDaily attendance
Direct teaching
     lecture28 h
     practice28 h
     consultation0 h
Self-study
     preparation for exam60 h
     preparation for regular assessment30 h
     writing of seminar paper22 h
Total168 h
 
Assessment methods:
One essay of 1500 words (30 % of total mark). One two-hour written examination (70 % of the total mark) at the end of the semester. 28 hours lectures, 28 hours seminars, total 56 hours.
 
Recommended reading:
TypeAuthorTitlePublished inPublisherYearISBN
RQLACINA, L. et al.Měnová integrace: náklady a přínosy členství v měnové uniiPrahaC.H. Beck2007978-80-7179-560-5
RQLACINA, L. -- RUSEK, A. et al.Evropská unie: Trendy, příležitosti, rizikaPlzeňnakladatelství Aleš Čeněk2007978-80-7380-077-2
RQGRAUWE, P D.Economics of monetary unionOxfordOxford University Press2009978-0-19-956323-4

RQrequired
RErecommended


Last modification made by Ing. Jiří Gruber on 06/24/2013.

Type of output: