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Optimum currency area in South Asia: A state space approach

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  • Banik, Nilanjan
  • Biswas, Basudeb
  • Criddle, Keith R.

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.

Suggested Citation

  • Banik, Nilanjan & Biswas, Basudeb & Criddle, Keith R., 2009. "Optimum currency area in South Asia: A state space approach," International Review of Economics & Finance, Elsevier, vol. 18(3), pages 502-510, June.
    • Handle: RePEc:eee:reveco:v:18:y:2009:i:3:p:502-510
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    References listed on IDEAS

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    Cited by:

    1. Nilanjan Banik & John Gilbert, 2010. "Regional Integration and Trade Costs in South Asia," Chapters, in: Douglas H. Brooks & Susan F. Stone (ed.), Trade Facilitation and Regional Cooperation in Asia, chapter 4, Edward Elgar Publishing.
    2. Kim, Won Joong & Hammoudeh, Shawkat, 2013. "Impacts of global and domestic shocks on inflation and economic growth for actual and potential GCC member countries," International Review of Economics & Finance, Elsevier, vol. 27(C), pages 298-317.
    3. Md. Abdur Rahman Forhad, 2014. "How many currencies in Saarc countries? a multivariate structural var approach," Journal of Developing Areas, Tennessee State University, College of Business, vol. 48(4), pages 265-286, October-D.
    4. Anjan Panday, 2014. "Monetary Integration between India and Nepal," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 15(2), pages 199-224, September.
    5. Muhammad Niaz Khan & Suzanne G. M. Fifield & Nongnuch Tantisantiwong & David M. Power, 2022. "Changes in co-movement and risk transmission between South Asian stock markets amidst the development of regional co-operation," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 36(1), pages 87-117, March.
    6. Golam Rasul & Prem Manandhar, 2009. "Prospects and Problems in Promoting Tourism in South Asia," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 10(1), pages 187-207, January.

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