Is South Asia an Optimum Currency Area?

Biswash Gauchan () and Vishal Sarin
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Biswash Gauchan: Mittal School of Business, Lovely Professional Universiy, Postal: Mittal School of Business, Lovely Professional University, Jalandhar - Delhi G.T. Road,, Phagwara, Punjab, India

Journal of Economic Integration, 2018, vol. 33, issue 3, 572-603

Abstract: We assess whether the South Asian Association of Regional Cooperation is an Optimum Currency Area by analyzing the symmetry of structural shocks. The result shows that SAARC countries experience asymmetric patterns of shocks, which implies the region is not yet ready for a common currency. However, we also find the increased number of positive correlation such as GDP growth, inflation, exchange rates movements and supply shocks compared to the results in the previous studies. Thus, macroeconomic convergence is ongoing among the countries, which can underpin the basis for greater monetary cooperation.

Keywords: South Asia; SVAR; Monetary integration (search for similar items in EconPapers)
JEL-codes: E42 F15 F33 F36 N15 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0753

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