Labor mobility and business cycle synchronization in Southern Africa

South African countries consider deepening the economic integra-tion and eventual adoption of a common currency. However, before they can engage in monetary integration, they should meet opti-mum currency area criteria. We investigate the role of bilateral migration in fostering business cycle synchronization using approach that combines Bayesian model averaging with likelihood function for dynamic panels with weakly exogenous regressors. Consequently, we are able to account for both model uncertainty and reverse causal-ity. The results give strong support to "Krugman's View" on economic and monetary integration. Labor force migration exacerbate business cycles, and consequently diminishes their synchronization after the initial shock, as well as fosters long-run business cycle divergence.