Year: 2026
Type: dissertation
Abstract: The topic of the common currency area is important considering the growing integration within the European Union (EU). The Eurozone plays a crucial role in the economic and political state of the EU; therefore, the shared currency is among the most well-talked about subjects today. This thesis provides an overview on the economic cohesion of the member states as well as the optimum currency area and its surrounding discussion regarding its deficiencies. This work investigates how the supply and demand shocks effect a country’s ability to join the eurozone, in addition to the criteria in the Maastricht Convergence Criteria. The thesis aims to validate the theory of Robert Mundell’s 1961 work on the optimum currency area, while considering the symmetric and asymmetric shocks in Hungary’s economy compared to the rest of the European Union member states. The research method is partly based on the Blanchard-Quah (1993) method which used unemployment rate and real GDP to differentiate the supply and demand shocks within a country. Following this method, data on CPI and real GDP were analysed using regression-, and structural vector autoregression analysis as the main methods in addition calculations done by principal component analysis, forecast variance composition and impulse response functions. The results of the study reveal that Hungary does not yet fulfill any of the required criteria, but their economy is rather well aligned with the rest of the Eurozone member states. The results of this thesis reveal a high supply shock presence in the economy of Hungary; therefore, the country is driven by technological changes. This paper provides insights into the economy of Hungary and its place in the European Union, in addition to the political elements regarding a single currency.
Author: Ónodi, Eszter
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7199208699
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