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

     ECTS syllabus          Syllabus          Timetable          

     Czech          English          

Course title: Theory of Economic and Monetary Integration
Semester: WS 2013/2014
Course supervisor: prof. Ing. Lubor Lacina, Ph.D.
Supervising department: Department of Finance (FBE)
Time allowance: full-time, 2/2 (hours of lectures per week / hours of seminars per week)
Prerequisites for registration: Intermediate Macroeconomics
Type of study: usual, consulting
Form of teaching: lecture, seminar
Mode of completion and credits: Exam (6 credits)
Course objective:
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 content:
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"?

Teaching methods and workload (hours of workload):
Type of teaching methodDaily attendance
Direct teaching
     lecture28 h
     practice28 h
     preparation for exam72 h
     preparation for regular testing40 h
Total168 h
Key words:
Course completion:
Three 50 minutes written tests (60% of the total mark) during the block (you have to receive minimum 36 points from maxim 60 to receive credit). The course is finished with oral exam (40% of the total mark).
Credit is compulsory for final exam participation. For Credit you have to receive minimal paint from 3 partial written tests. Participation on test is compulsory.

Written tests -- 3 written tests will be during the course. Maximum points for each test is 20, so maximal total receive points could be 60. For Credit is necessary to have at least 36 points. Test will be written 5th, 8th and 11th week of the semester. Participation on the written tests at aforementioned weeks is compulsory.
Course methods: Attendance at all lectures and seminars is expected and is deemed to be a course requirement.
The aim of the seminars is to supplement knowledge received during attendance of lectures and reading chapters from obligatory course literature. There will be 3 types of seminars:
Reading list:
LACINA, L. -- FIDRMUC, J. -- RUSEK, A. Economic Performance of European Union: Issues, Trends and Policies. 1st ed. Houndmills: Palgrave Macmillan, 2008. 262 p. ISBN 978-0-230-22227-4.
LACINA, L. et al. Měnová integrace: náklady a přínosy členství v měnové unii. 1st ed. Praha: C.H. Beck, 2007. 538 p. ISBN 978-80-7179-560-5.
KAPOUNEK, S. -- LACINA, L. Taylor Rule and EMU - Monetary Policy Determination and ECB's Preferences. Acta Universitatis agriculturae et silviculturae Mendelianae Brunensis = Acta of Mendel University of agriculture and forestry Brno = Acta Mendelovy zemědělské a lesnické univerzity v Brně. 2006. v. LIV, no. 6, p. 85--96. ISSN 1211-8516.
LACINA, L. -- ROZMAHEL, P. -- RUSEK, A. 10 Years of Euro: Success?. 1st ed. Plzeň: nakladatelství Aleš Čeněk, 2009. 318 p. ISBN 978-80-7380-226-4.

Grauwe de P., The Theory of Monetary Integration, Oxford: Oxford University Press, Fifth Edition, 2003.

Study plans:
C-EPA-F Finances, full-time form, initial academic year SS 2011/2012
C-EPA-FIM Finance and Investment Management, part-time form, initial academic year WS 2012/2013
C-EPA-FIM Finance and Investment Management, full-time form, initial academic year WS 2012/2013
Run in the period of: WS 2018/2019, SS 2017/2018, WS 2017/2018, SS 2016/2017, WS 2016/2017, SS 2015/2016   (and older)
Course tutor: prof. Ing. Lubor Lacina, Ph.D. (examiner, instructor, lecturer, supervisor, tutor)
Ing. Klára Plecitá (tutor)
Ing. Pavel Žiaran, Ph.D. (examiner, instructor, tutor)
Teaching language: English
Town: Brno

Last modification made by Ing. Marcel Vytečka on 05/29/2013.

Type of output: