Optimum currency area in South Asia: A state space approach

Nilanjan Banik (), Basudeb Biswas () and Keith Criddle

International Review of Economics & Finance, 2009, vol. 18, issue 3, 502-510

Abstract: This paper is an empirical investigation of the feasibility of an optimum currency area (OCA) in South Asia. Countries are good candidates for forming an OCA if their economies are similarly structured and if their economies share similar responses to exogenous shocks. That is, among other characteristics, good candidates for forming an OCA will share a coincident pattern of economic booms and recessions. We use a state space time series model with a stochastic trend to explore the extent to which the Indices of Industrial Production for South Asian nations share common dynamic responses to exogenous shocks.

Keywords: Optimum; currency; area; South; Asia; State; space; modeling (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:18:y:2009:i:3:p:502-510

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