Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/35899 
Year of Publication: 
2009
Series/Report no.: 
IZA Discussion Papers No. 4316
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
This 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.
Subjects: 
Optimum currency area
gravity model
Southern African integration
endogenous optimum currency area theory
JEL: 
F1
F3
F4
O24
O55
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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