The Prospect of the Proposed Currency Union on Intra-regional Trade: Southern African Customs Union

Stanley Abban ()

MPRA Paper from University Library of Munich, Germany

Abstract: Formal currency union with a common policy is welfare superlative to formal currency union due to relatively greater transparency. The study evaluates whether adopting a common currency will lead to trade. Additionally, the study estimates whether countries are under trading or overtrading to investigate whether there exists trade potential. The results show there exists greater trade potential due to geographic and economic fundamentals therefore adopting a common currency will lead to trade. Also, the study showed that the financial markets served as a buffer for the volatility of the currencies notably the Rand. The study concludes that a currency union with a common policy could serve as a panacea when the appropriate institutional policy framework is adopted to reduce trade and non-trade barriers.

Keywords: Currency Union; Overtrading; under trading; trade potential; Southern Africa Customs Union (SACU). (search for similar items in EconPapers)
JEL-codes: E2 E24 E26 E5 E52 E58 F1 F15 (search for similar items in EconPapers)
Date: 2020-04-10
New Economics Papers: this item is included in nep-cba, nep-int and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:103123

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