D-8 Ülkeleri Arasında Parasal Birlik Mümkün Mü? Optimum Para Sahası Çerçevesinde İncelenmesi

Abstract

Globalization movements and exchange rate fluctuations deeply affect fragile economies and pose risks. Countries have developed various policies to eliminate this exchange rate risk. A monetary union, which is formed by a group of countries, is a crucial tool against the exchange rate risk. This has many benefits, such as the reduction of transaction costs, encouragement of international trade, elimination of exchange rate uncertainty, reduction of information costs, prevention of speculative capital movements, and creation of price transparency. These further benefit consumers and producers. A monetary union also provides microeconomic efficiency because it facilitates price comparison. Therefore, the prices of the member states of the union are expected to converge. Moreover, a monetary union will inevitably create some costs and disadvantages for the member countries. These disadvantages include a loss of national monetary policy independence, imbalances between member countries, problems caused by demand changes, inability to meet unemploymentinflation targets, and deprivation of national seigniorage income.The Optimum Currency Area theory provides two sets of measures that would maximize economic efficiency for an entire region to enable the use of a single currency. The first one is the mitigation of exposure to asymmetric shocks through the similarity of economic structures, openness of trade, and low degree of specialization. The second group is easing adjustment to asymmetric shocks through preference homogeneity, factor mobility, and transfer payments. With this in consideration, the Maastricht criteria are based on economic indicators that European Union member countries must fulfill to get into the European currency area and that they must ensure to maintain once got in the union. To establish a successful and sustainable monetary union, the economic indicators of the countries must ABSTRACT A monetary union means ensuring unity in exchange rates, eliminating all restrictions on capital movements, and realizing convertibility among member countries. Although this concept is not new, the establishment of the European Monetary Union has led to renewed interests. Applying the European member countries' experience and knowledge on this subject is crucial for the economic stability and development of Islamic countries. Using the quarterly data of the exchange rate, inflation, interest rate, and trade during 2000-2020, our study tests whether the D-8 is an optimum currency area. Based on the results of the vector error correction model, the impulse response function, and the variance decomposition, it has been determined that the D-8 as a whole is not an optimum currency area. However, Turkey, Nigeria, Egypt, and Malaysia, considered as a subgroup within the D-8, experience relatively similar shocks to their exchange rates, inflation, interest rates, and trade, as compared with the rest of the D-8. Although these countries are geographically fragmented and distant, their theoretical monetary union would be ...