A Single Currency for Pacific Island Countries: An SVAR Analysis

Tiru Jayaraman () and Bert D. Ward ()
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Bert D. Ward: Commerce Division, Lincoln University, Postal: Lincoln Canterbury 7647 New Zealand ,, http://www.lincoln.ac.nz/

Economia Internazionale / International Economics, 2006, vol. 59, issue 1, 83-111

Abstract: Interest in monetary integration of 14 Pacific island countries was aroused in 2003 by an Australian Senate Committee’s suggestion for adoption of the Australian dollar as common currency towards deeper regional integration. A common currency entails a single set of economic, monetary, financial and fiscal policies to influence the balance of payments of the region. Such a single set of policies can be justified only when all the prospective member countries face a similar pattern of shocks. this paper develops a structural VAr model with which to examine whether there exists a high degree of symmetry in shocks. The empirical findings fail to support the case for a currency union.

JEL-codes: C32 F15 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (8)

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