Southern African Economic integration: evidence from an augmented gravity model

The paper investigates the feasibility of creating a common-currence union consisting of 16 countries in Southern Africa. It estimates an augmented-gravity model that includes public deficit, public debt, public expenditure, inflation and the foreign reserves position. The paper shows that the prospect for further integration in Southern Africa is promising, but challenges persist. Existing economic blocs can provide a stepping stone to a larger single currency union but countries have to continuously exercise good governance and fiscal displine. Click here for the full paper.