Bogdan Glăvan

In the last decades, more and more economists have advanced the idea that significant obstacles impeding economic growth (especially in less developed regions) consist in different market failures,

In this paper the theory of optimum currency areas (OCA) is presented, and then I will attempt to prove:

1. The OCA theory is nonoperational and irrelevant in dealing with the present international monetary situation.
2. The basic postulates of OCA theory are internally inconsistent and incompatible with economic theory.

The aim of this paper is to criticize the foundation and the relevance of the insulation argument. In what follows, I will attempt to show that: (1) The favor flexible exchange rates enjoy