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dc.contributor.authorFreitag, Stephanen_US
dc.description.abstractThis paper analyses currency options for six Pacific states - Fiji, Papua New Guinea, Samoa, Solomon Islands, Tonga and Vanuatu - that issue their own currencies. Empirical estimates indicate that these states already stabilize their currencies against the US dollar because of their large and increasing trade with emerging Asia which denominates its trade in US dollars. Building on the theory of an optimal peg, we argue that the replacement of present currencies by the US dollar would strengthen these countries' trade. Gravity model estimations indicate that adopting a common external currency would be a major stimulus to Pacific trade. While the Australian dollar has been suggested because of the Pacific's traditional trade relations with Australia this choice would be the result of a reverse causality bias. A binary choice method is applied to trace endogeneity biases in the Pacific sample. The gains for trade from the adoption of an external currency are lower but remain positive.en_US
dc.publisher|aVerein für Socialpolitik |cFrankfurt a. M.en_US
dc.relation.ispartofseries|aBeiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Trade, Capital Account and Currency Crises |xB7-V4en_US
dc.subject.keywordCurrency regimesen_US
dc.subject.keywordgravity modelen_US
dc.subject.keywordbinary choiceen_US
dc.titleChoosing an anchor currency for the Pacificen_US
dc.typeConference Paperen_US

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