Course syllabus TEIAC - Theory of Economic and Monetary Integration (FBE - SS 2015/2016)


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Course title: Theory of Economic and Monetary Integration
Semester: SS 2015/2016
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: consulting
Form of teaching: lecture, seminar
Mode of completion and credits: Exam (6 credits)
 
Course objective:
The course introduces 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 in monetary union, the role of European Central Bank within European Monetary Union and eurozone crisis and its possible solutions.
 
Course content:
1.European Economic and monetary integration (allowance 2/2)
 
a.Steps of economic and political integration in West Europe - from custom to monetary union
b.Eurozone crisis - roots and future

2.The Theory of Optimum Currency Areas: Cost analysis (allowance 4/2)
 
a.The Costs of a Common Currency
b.Different Preferences of Countries about Inflation and Unemployment
c.Differences in Growth Rates
d.Different Fiscal Systems

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

4.The Benefits of a Common Currency (allowance 2/2)
 
a.Direct and Indirect Gains from the Elimination of Transaction Costs
b.Exchange Rate Uncertainty and the Price Converegence
c.Exchange Rate Uncertainty and the Economic Growth
d.Benefits of Monetary Union and the Openness of Countries

5.OCA Theory: Cost and Benefits Compared (allowance 2/2)
 
a.Otpimistic vers. pessimistic view, , Price and Wage Rigidities, and Labour Mobility
b.Asymmetric Shocks and Labour Market Flexibility
c.Costs and Benefits in the Long Run

6.Fragility of Incomplete Monetary Unions (allowance 2/2)
 
a.The Credibility and Liquidity Problem in Pegged Exchange rate Systems
b.The Disintegration of the EMS in 1992-3
c.A monetary union without budgetary union

7.The transition to a Monetary Union (allowance 2/2)
 
a.The Maastricht Treaty and Convergence Criteria
b.Why Convergence Requirements?
c.Alternative Transition Scenarios and Requirements

8.The Design of Eurosystem (allowance 2/2)
 
a.The Design of eurosystem and the role of ECB
b.Political Independence and Inflation
c.The Design of the ECB: Further Issues

9.Monetary Policy in the Eurozone (allowance 2/2)
 
a.Central banking and asymmetries of shocks
b.The monetary strategy of ECB
c.The instruments of monetary policy in eurozone
d.The role of ECB during the crisis: ECB as lender of last resort

10.Fiscal Policies in Monetary Unions (allowance 2/4)
 
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 Reform: An Evaluation

11.Eurozone Future: How to Complete a Monetary union? (allowance 4/4)
 
a.Eurozone Crisis: roots and dynamics of the crisis.
b.Consolidating governemnt budgets and deficits
c.Coordination of budgetary and economic policies
d.Eurzone future scenarious: Is fiscal union feasible?

 
Teaching methods and workload (hours of workload):
Type of teaching methodDaily attendance
Direct teaching
     lecture28 h
     practice28 h
Self-study
     preparation for exam72 h
     preparation for regular testing40 h
Total168 h
 
Key words:
none
 
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.
 
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.
 
Reading list:
Basic:
Economics of monetary union. 9th ed. Oxford: Oxford University Press, 2012. 1 p. ISBN 978-0-19-960557-6.
GRAUWE, P D. Economics of monetary union. 8th ed. Oxford: Oxford University Press, 2009. 290 p. ISBN 978-0-19-956323-4.

Recommended:
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.

Study plans:
-- item not defined --
 
Run in the period of: WS 2018/2019, SS 2017/2018, WS 2017/2018, SS 2016/2017, WS 2016/2017, WS 2015/2016   (and older)
Course tutor: prof. Ing. Lubor Lacina, Ph.D. (supervisor)
Teaching language: English
Town: Brno


Last modification made by Ing. Jiří Gruber on 02/10/2016.

Type of output: