TITLE:
Concept of Integrative Currency Area and Application to the Central Europe
AUTHORS:
Mieczysław Dobija
KEYWORDS:
Currency Area, Labor Productivity, Translation, Monetary Unit
JOURNAL NAME:
Modern Economy,
Vol.9 No.7,
July
23,
2018
ABSTRACT: Euro zone is created along with theory of optimal currency
area. This theory is not the only solution that indicates how to integrate countries
in the common currency area. The euro area requires that labor productivity is at
a similar level. Central European countries, on the other hand, have much lower
labor productivity than Western European countries. The question arises about the
possibility of creating a currency zone for countries with different levels of productivity.
In this paper, it is indicated that there is a positive answer in this matter. However,
this requires a rethinking and definition of the basic arrangement of the economic
concepts. The paper indicates a method of translating economic values into value
of the one currency. The main measurer limiting freedom is the labor productivity
index, which cannot decrease what would cause inflation. The lower labor productivity
means only that employees have the lower earnings.