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Can South Asia Adopt a Common Currency?

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Author Info

  • Sweta C. Saxena

    (University of Pittsburgh)

Abstract

The paper examines if the seven South Asian countries satisfy the criteria to form an optimal currency area. The empirical part of the paper reveals some positive attributes (such as the existence of positive shocks for major economies like India, Pakistan and Sri Lanka). The paper provides geo-political reasoning for more economic cooperation among the countries, suggesting areas where cooperation could be mutually beneficial to the economies. This paper argues that the benefits of a common currency would accrue from the peace that economic integration would bring between India and Pakistan. The paper also compares this region with Western Europe and Southeast Asia.

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File URL: http://128.118.178.162/eps/if/papers/0508/0508001.pdf
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Bibliographic Info

Paper provided by EconWPA in its series International Finance with number 0508001.

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Length: 44 pages
Date of creation: 07 Aug 2005
Date of revision:
Handle: RePEc:wpa:wuwpif:0508001

Note: Type of Document - pdf; pages: 44
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Web page: http://128.118.178.162

Related research

Keywords: South Asia; SAARC; Monetary union; economic integration; optimal currency areas;

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References

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  1. Andrew Rose, 2004. "A Meta-Analysis of the Effect of Common Currencies on International Trade," NBER Working Papers 10373, National Bureau of Economic Research, Inc.
  2. Tamim Bayoumi, 1991. "The Effect of the ERMon Participating Economies," IMF Working Papers 91/86, International Monetary Fund.
  3. Reuven Glick & Andrew K. Rose, 2001. "Does a Currency Union Affect Trade? The Time Series Evidence," NBER Working Papers 8396, National Bureau of Economic Research, Inc.
  4. Frankel, Jeffrey A. & Rose, Andrew K., 1997. "Is EMU more justifiable ex post than ex ante?," European Economic Review, Elsevier, vol. 41(3-5), pages 753-760, April.
  5. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-73, September.
  6. Tamim Bayoumi & Paolo Mauro, 2001. "The Suitability of ASEAN for a Regional Currency Arrangement," The World Economy, Wiley Blackwell, vol. 24(7), pages 933-954, 07.
  7. Frankel, Jeffrey A & Rose, Andrew K, 1996. "The Endogeneity of the Optimum Currency Area Criteria," CEPR Discussion Papers 1473, C.E.P.R. Discussion Papers.
  8. Valerie Cerra & Sandra A. Rivera & Sweta C. Saxena, 2005. "Crouching Tiger, Hidden Dragon: What Are the Consequences of China’s WTO Entry for India’s Trade?," International Trade 0508005, EconWPA.
  9. Andrew K. Rose & Charles Engel, 2000. "Currency Unions and International Integration," NBER Working Papers 7872, National Bureau of Economic Research, Inc.
  10. Eichengreen, Barry, 1993. "European Monetary Unification," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1321-57, September.
  11. Andrew K. Rose & T. D. Stanley, 2005. "A Meta-Analysis of the Effect of Common Currencies on International Trade ," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 347-365, 07.
  12. Jeffrey A. Frankel & Andrew K. Rose, 2000. "Estimating the Effect of Currency Unions on Trade and Output," NBER Working Papers 7857, National Bureau of Economic Research, Inc.
  13. International Monetary Fund, 2005. "Crouching Tiger, Hidden Dragon," IMF Working Papers 05/101, International Monetary Fund.
  14. Catherine A. Pattillo & Paul R. Masson, 2001. "Monetary Union in West Africa (ECOWAS)," IMF Occasional Papers 204, International Monetary Fund.
  15. Andrew K. Rose, 2000. "One money, one market: the effect of common currencies on trade," Economic Policy, CEPR & CES & MSH, vol. 15(30), pages 7-46, 04.
  16. Hassan, M. Kabir, 2001. "Is SAARC a viable economic block? evidence from gravity model," Journal of Asian Economics, Elsevier, vol. 12(2), pages 263-290.
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Citations

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Cited by:
  1. Agénor, Pierre-Richard & Aizenman, Joshua, 2011. "Capital market imperfections and the theory of optimum currency areas," Journal of International Money and Finance, Elsevier, vol. 30(8), pages 1659-1675.
  2. Devanthran, Haritharan, 2009. "Interdependence of SAARC-7 countries: an empirical study of business cycles," MPRA Paper 32798, University Library of Munich, Germany.
  3. Sweta C. Saxena, 2005. "Are Optimal Currency Areas Optimal for All? A Reassessment of the Case for Asian Monetary Union," International Finance 0508003, EconWPA.
  4. Chuku, Chuku, 2012. "The proposed eco: should West Africa proceed with a common currency?," MPRA Paper 43739, University Library of Munich, Germany.

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Валютный союз in Wikipedia (Russian)
  2. Unión monetaria in Wikipedia (Galician)
  3. Unión monetaria in Wikipedia (Spanish)

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