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Monetary Integration among Oil Exporter Countries: Testing Kenen s Product Diversification Hypothesis in the Organization of Islamic Cooperation

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  • Memet Agustiar

    (Department of Economics and Business, University of Tanjungpura, Pontianak, Indonesia.)

Abstract

Kene (1969) hypothesizes that countries that are largely dependent on one export commodity could experience weaker monetary integration and synchronize the business cycle among them. This paper aims to retest Kenen's hypothesis, which is applied to the seven largest oil-producing countries in the Islamic world. This study employs the Optimum Currency Area (OCA) Index and the Pearson correlation matrix to determine the degree of integration and synchronization of the business cycle. This study empirically proves that most oil-producing countries are tightly integrated. Kenen's hypothesis is less applicable to oil-exporting countries, especially oil countries that have a strong economic structure and higher welfare. This study successfully explains the new empirical finding that homogeneity in the export structure is not bad for monetary integration.

Suggested Citation

  • Memet Agustiar, 2020. "Monetary Integration among Oil Exporter Countries: Testing Kenen s Product Diversification Hypothesis in the Organization of Islamic Cooperation," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 380-388.
    • Handle: RePEc:eco:journ2:2020-03-48
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    References listed on IDEAS

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    Cited by:

    1. Nisful Laila & Aam S. Rusydiana & Muhamad Iqbal Irfany & Imron HR & Popon Srisusilawati & Muhamad Taqi, 2021. "Energy Economics in Islamic Countries: A Bibliometric Review," International Journal of Energy Economics and Policy, Econjournals, vol. 11(2), pages 88-95.
    2. Sugra Ingilab Humbatova & Natig Gadim-Ogli Hajiyev, 2021. "The Relationship between Oil Prices and Real Estate Loans and Mortgage Loans in Azerbaijan," International Journal of Energy Economics and Policy, Econjournals, vol. 11(1), pages 341-354.
    3. Khalid Abdullah Alkhathlan & Tarek Tawfik Yousef Alkhateeb & Haider Mahmood & Wardah Abdulrahman Bindabel, 2020. "Determinants of Diversification from Oil Sector in Saudi Arabia," International Journal of Energy Economics and Policy, Econjournals, vol. 10(5), pages 384-391.

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    More about this item

    Keywords

    Monetary integration; Optimum Currency Area; Islamic nations; oil countries.;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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