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dc.contributor.authorLahari, Willie
dc.date.available2011-12-06T03:06:28Z
dc.date.copyright2011-10-01
dc.identifier.citationLahari, W. (2011). Exchange Rate Volatility and Choice of Anchor Currency - Prospects for a Melanesian Currency Union (Economics Discussion Papers Series No. 1111). University of Otago. Retrieved from http://hdl.handle.net/10523/2064en
dc.identifier.issn1178-2293
dc.identifier.urihttp://hdl.handle.net/10523/2064
dc.description.abstractThis paper investigates an appropriate choice of anchor currency for a proposed Melanesian currency union under various hypothetical currency union arrangements. Drawing from the optimal currency area (OCA) theory and related extensions, the analysis focuses on the effects of a currency union on exchange rate volatility following similar approach by Scrimgeour (2002). Counterfactual exchange rate series are constructed for alternative scenarios for Melanesia with the following major trading partners: Australia, New Zealand, USA and Japan. The main findings showed that both short-term and cyclical exchange rate volatility are generally lower in a currency union with either Australia or New Zealand. However, the results vary under varying weights and currency baskets. Choosing a single common anchor currency based solely on exchange rate volatility may not be conclusive. Hence, further research is required, for example, in considering the effects of a currency union on volatility in output, inflation or interest rates.en_NZ
dc.format.mimetypeapplication/pdf
dc.language.isoenen_NZ
dc.publisherUniversity of Otagoen_NZ
dc.relation.ispartofseriesEconomics Discussion Papers Seriesen_NZ
dc.relation.urihttp://www.business.otago.ac.nz/econ/research/discussionpapers/index.htmlen_NZ
dc.subjectExchange Rate Volatilityen_NZ
dc.subjectCurrency Unionen_NZ
dc.subjectMelanesian Countriesen_NZ
dc.titleExchange Rate Volatility and Choice of Anchor Currency - Prospects for a Melanesian Currency Unionen_NZ
dc.typeDiscussion Paperen_NZ
otago.schoolDepartment of Economicsen_NZ
otago.openaccessOpen
otago.relation.number1111en_NZ
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