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Title:Stability of monetary unions: Lessons from the break-up of Czechoslovakia PDF Logo
Authors:Fidrmuc, Jan
Horvath, Julius
Fidrmuc, Jarko
Issue Date:1999
Series/Report no.:ZEI working paper B 17-1999
Abstract:In 1993, Czechoslovakia experienced a two-step break-up. On January 1, the country disintegrated as a political union, while preserving an economic and monetary union. Then, the Czech-Slovak monetary union collapsed on February 8. This paper analyzes the economic background of the two break-ups from the perspective of the optimum currency area literature. The main finding is that the Czech and Slovak economies were vulnerable to asymmetric economic shocks, such as those induced by the economic transition. In particular, the stability of Czechoslovakia was undermined by low correlation of permanent output shocks, low labor mobility and higher concentration of heavy and military industries in Slovakia.
Subjects:Optimum currency areas
Document Type:Working Paper
Appears in Collections:ZEI Working Papers, Zentrum für Europäische Integrationsforschung, Universität Bonn

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