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Is time ripe for a currency union in emerging East Asia? The role of monetary stabilisation

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  • Sánchez, Marcelo
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    Abstract

    This paper assesses the prospects for monetary integration between Emerging East Asian (EEA) economies. Our empirical analysis is based on a simple analytical framework for currency unions of small open economies, with a focus on the conduct of monetary policy in the presence of different types of shocks. Our empirical analysis looks at a number of supply-side characteristics of EEA countries, distinguishing between aggregate and tradable sector structural features. Moreover, we discuss the evidence on the cross-country variation of disturbances hitting the region. Our study indicates that, at present, EEA economies exhibit a high degree of cross-country supply diversity, while there is no compelling evidence that shocks are highly correlated across the region. JEL Classification: E52, E58, F33, F40

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    Bibliographic Info

    Paper provided by European Central Bank in its series Working Paper Series with number 0567.

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    Date of creation: Dec 2005
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    Handle: RePEc:ecb:ecbwps:20050567

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    Keywords: Currency union; East Asia; emerging economies; stabilisation;

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    Cited by:
    1. Hsiufen Hsu, 2009. "Is a common currency area feasible for East Asia? A multivariate structural VAR approach," OSIPP Discussion Paper 09E006, Osaka School of International Public Policy, Osaka University.
    2. Katrin Elborgh-Woytek & Julian Berengaut, 2006. "Beauty Queens and Wallflowers," IMF Working Papers 06/226, International Monetary Fund.

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