چکیده:
In recent years, there has been an increasing interest in currency unions 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 unions 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.
خلاصه ماشینی:
"Given the importance of this issue, the present study investigates effective factors on trade such as: language, common borders, GDP, distance between these countries, common currency, and OIC currency and trade unions through OCA in the framework of Augmented Gravity Model.
Sharing a currency union facilitates bilateral trade among the member states in the union by reducing transaction costs for cross-border business and eliminates the nominal exchange rate volatility among the union countries.
25 F Source: Research findings Comment: Time variable was incorporated into the model to eliminate time trend The coefficient of dummy variable FTA shows that belonging to a regional trade union increases the trade by 209 percent, which is explained by the fact of lower tariffs among the member states, and consequently, lowers prices of imported goods compared to those in non-member countries, which boosts the trade among members.
According to findings of the study, GDP, common language, common borders, exchange rate volatility, and trade union (to which both host and source countries are a member) have significantly affected the trade flow from source to host countries.
Currency union (unit currency) has had a positive and significant effect on trade flow in Islamic countries, and variable for exchange rate volatility of the currency union has not been significant.
Common currency facilitates bilateral trade among union members through elimination of transaction costs and exchange rate volatility.
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)."