Southern African Economic Integration: Evidence from an Augmented Gravity Model
AbstractThis paper investigates the feasibility of creating a common-currency union consisting of 16 countries in Southern Africa. We estimate an augmented-gravity model that includes public deficit, public debt, public expenditure, inflation, and the foreign reserves position. We also integrate Africa-specific variables such as existing economic blocs in the region, colonial heritage, and the convergence of living standards. Our analysis shows that the prospect for further integration in Southern Africa is promising, but many challenges still persist. The existing economic blocs can provide a first stepping stone to a larger currency union, but countries continuously have to cultivate good governance and fiscal discipline.
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Bibliographic InfoArticle provided by Africagrowth Institute in its journal African Finance Journal.
Volume (Year): 13 (2011)
Issue (Month): 1 ()
optimum currency area; gravity model; Southern African integration; endogenous optimum currency area theory;
Other versions of this item:
- Warin, Thierry & Wunnava, Phanindra V. & Tengia, Optat & Wandschneider, Kirsten, 2009. "Southern African Economic Integration: Evidence from an Augmented Gravity Model," IZA Discussion Papers 4316, Institute for the Study of Labor (IZA).
- F1 - International Economics - - Trade
- F3 - International Economics - - International Finance
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- O24 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
- O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa
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