Currency ::union:: and Bilateral Trade: Evidence from OIC Countries

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Abstract:

In recent years, there has been an increasing interest in currency :union:s internationally. The formation of currency :union: in Organization of Islamic Cooperation (OIC) has drawn much attention of Islamic countries. This paper aims to investigate the effect of currency :union: formation for trade among 49 Islamic countries over the period 1990-2012 by OCA and Augmented Gravity Model (AGM). The results show that common language, borders, and trade :union:s had positive and significant effect on trade in OIC countries; and being landlocked and distance between source and host countries had negative and significant effect on bilateral trade. Also, the currency :union: had positive and significant effects on trade in OIC countries. The evidence thus suggests that regional currency :union: arrangements stimulate bilateral trade in OIC rigorously. JEL Classification: F47, E49         

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Journal title

volume 9  issue 2

pages  140- 166

publication date 2014-10

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