TY  - RPRT
        AU  - Warin, Thierry
AU  - Wunnava, Phanindra V.
AU  - Tengia, Optat
AU  - Wandschneider, Kirsten
        TI  - Southern African Economic Integration: Evidence from an Augmented Gravity Model
        PY  - 2009/Jul/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 4316
        UR  - https://www.iza.org/publications/dp4316
        AB  - This paper investigates the feasibility of creating a common-currency union consisting of 16 countries in Southern Africa. We estimate an augmented-gravity model that includes public deficit, public debt, public expenditure, inflation, and the foreign reserves position. We also integrate Africa-specific variables such as existing economic blocs in the region, colonial heritage, and the convergence of living standards. Our analysis shows that the prospect for further integration in Southern Africa is promising, but many challenges still persist. The existing economic blocs can provide a first stepping stone to a larger currency union, but countries continuously have to cultivate good governance and fiscal discipline.
        KW  - optimum currency area
KW  - gravity model
KW  - Southern African integration
KW  - endogenous optimum currency area theory
        ER  -