Feasibility study of a single currency for Pacific Islands: a principal components approach

Chandra, Subash A. and Jayaraman, Tiruvalangadu K. (2006) Feasibility study of a single currency for Pacific Islands: a principal components approach. South Pacific Studies, 27 (1). pp. 51-65. ISSN 0916-0752

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Abstract

In August 2003, an Australian Senate Committee recommended adoption of a single regional currency, preferably the Australian dollar as a possible remedy to meet the deteriorating economic situations in the Pacific Island Countries, arising from poor fiscal discipline and failure to effectively use external aid inflows. A suggestion to adopt the Australian dollar as a common currency amongst Pacific Island Countries was initiated by Australia during the Annual Meeting of the Pacific Islands Forum Leaders in Auckland, in August 2003. Although the subject was not discussed, the idea of a single currency for the region became a widely discussed topic in other forums in the later months. This paper examines the feasibility of the formation of a currency union by Pacific Island Countries with Australia in light of the principal components approach. This determines any synchronization in the movements of various key economic variables over the last two decades so that common exchange rate and monetary policies can be followed by a currency union amongst Pacific Island Countries and the two major metropolitan countries in the region.

Item Type:	Journal Article
Subjects:	H Social Sciences > HG Finance
Divisions:	Faculty of Science, Technology and Environment (FSTE) > School of Computing, Information and Mathematical Sciences Faculty of Business and Economics (FBE) > School of Economics
Depositing User:	Ms Neha Harakh
Date Deposited:	08 Dec 2006 20:42
Last Modified:	10 May 2012 08:15
URI:	http://repository.usp.ac.fj/id/eprint/2667

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