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A Greek wedding in SADC? - Testing for structural symmetry towards SADC monetary integration

Author

Listed:
  • Marthinus C. Breitenbach

    () (Department of Economics, University of Pretoria)

  • Francis Kemegue

    () (Department of Economics, University of Pretoria, and Framingham University, USA)

  • Mulatu F. Zerihun

    () (Department of Economics, University of Pretoria)

Abstract

This paper investigates structural symmetry among SADC countries in order to establish, judged by modern OCA theory, which of these countries may possibly make for a good monetary matrimony and which countries may be left out in the cold. SADC remains adamant that it would conclude monetary union by 2018. It can ill afford a repeat of the type of financial and fiscal instability brought about by ex ante structural economic differences and asynchronous business cycles in the EU. This study contributes to the literature on macro-economic convergence in the SADC region. We make use of the Triples test to analyse each country’s business cycles for symmetry and then evaluate SADC countries’ ratio of relative intensity of co-movements in business cycles with co-SADC country and versus that of major trade partners. We find that not all countries in SADC conform to OCA criteria judged by both asymmetrical business cycles and weak co-movements in business cycles.

Suggested Citation

  • Marthinus C. Breitenbach & Francis Kemegue & Mulatu F. Zerihun, 2012. "A Greek wedding in SADC? - Testing for structural symmetry towards SADC monetary integration," Working Papers 201234, University of Pretoria, Department of Economics.
  • Handle: RePEc:pre:wpaper:201234
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    References listed on IDEAS

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    Cited by:

    1. Zerihun, Mulatu F. & Breitenbach, Marthinus C., 2016. "Nonlinear approaches in testing PPP: Evidence from Southern African development community," Economic Modelling, Elsevier, vol. 56(C), pages 162-167.
    2. Mulatu F. Zehirun & Marthinus C. Breitenbach & Francis M. Kemegue, 2015. "Assessment of Monetary Union in SADC: Evidence from Cointegration and Panel Unit Root Tests," Working Papers 201502, University of Pretoria, Department of Economics.
    3. Mulatu F. Zehirun & Marthinus C. Breitenbach & Francis Kemegue, 2014. "Monetary Integration in SADC: Assessment of Policy Coordination and Real Effective Exchange Rate Stability," Working Papers 201473, University of Pretoria, Department of Economics.

    More about this item

    Keywords

    Triples test; optimal currency area; SADC; structural symmetry;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F15 - International Economics - - Trade - - - Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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