MENA countries as optimal currency areas: Reality or dream

摘要

This paper evaluates the possibility and the likelihood of forming a currency area for MENA countries conceptually and empirically. Two main approaches determining the domain of optimum currency areas exist: the traditional approach, which tries to single out crucial criteria to delineate the appropriate domain, and cost-benefit approach, which believes that the participation in a currency area has both benefits and costs. The possibility of forming more than one currency area for MENA countries is also analyzed. Since currency areas are a quite different concept from geographic areas discussion and evaluation of more than one currency areas among MENA countries seems a worthwhile endeavor. Having more currency areas in a group of countries could be more beneficial. A genetic algorithm approach is used to determine optimal currency areas. The genetic algorithm is an optimization method based on natural selection. It does not require a smooth objective function.