An Assessment of Indonesia s Monetary Integration with Oil Exporter Countries in Islamic Nations: Evidence from Panel Data

Memet Agustiar
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Memet Agustiar: Department of Economics and Business, University of Tanjungpura, Pontianak, Indonesia.

International Journal of Energy Economics and Policy, 2020, vol. 10, issue 1, 89-95

Abstract: The paper aims to assess the monetary integration between Indonesia and oil exporting countries in Islamic countries. Increasing the oil trade intensity between Indonesia and oil-producing countries can drive monetary integration among them. This study applies the Optimum Currency Area (OCA) index to measure the degree of monetary integration between Indonesia and 21 oil-producing countries in the OIC. The results exhibit that the majority of oil-producing countries are strongly integrated with Indonesia. The panel regression test highlights two variables the inflation similarity and trade openness which had a significant effect on the OCA. This study provides an important policy base for Indonesia, primarily in improving its relations with oil-producing countries. Two channels trade openness and maintaining harmonious price stability are the entry point for Indonesia to integrate with oil countries.

Keywords: Monetary integration; Optimum Currency Area; Islamic nations; Indonesia; oil countries. (search for similar items in EconPapers)
JEL-codes: E42 F33 F36 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ2:2020-01-13

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