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The Suitability of A Greater China Currency Union

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  • Yin-wong Cheung

    (University of California, Santa Cruz)

  • Jude Yuen

    (University of California, Santa Cruz)

Abstract

The study assesses the level of integration among the three Greater China economies (namely China, Hong Kong, and Taiwan) and examines the suitability of a Greater China currency union. Currently, the three economies have extensive trade and investment linkages. Our analyses show that these economies share common long-run and short-run cyclical variations. We also estimate the output costs of relinquishing policy autonomy to form a currency union. The estimated output losses, which depend on, for example, the method used to generate shock estimates, seem to be moderate and are likely to be less than the efficient gains derived from a currency union arrangement.

Suggested Citation

  • Yin-wong Cheung & Jude Yuen, 2004. "The Suitability of A Greater China Currency Union," Working Papers 122004, Hong Kong Institute for Monetary Research.
    • Handle: RePEc:hkm:wpaper:122004
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    Cited by:

    1. Pierre L. Siklos & Yang Zhang, 2010. "Identifying The Shocks Driving Inflation In China," Pacific Economic Review, Wiley Blackwell, vol. 15(2), pages 204-223, May.
    2. Emma Xiaoqin Fan & Jesus Felipe, 2005. "The diverging patterns of profitability, investment and growth of China and India, 1980-2003," CAMA Working Papers 2005-22, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    3. Tony Cavoli & Ramkishen S. Rajan, 2007. "Exploring the Case for Monetary Integration between the Chinese Mainland and Hong Kong," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 15(4), pages 17-34, July.
    4. repec:rim:rimwps:34-07 is not listed on IDEAS
    5. Yin-Wong Cheung & Matthew S. Yiu & Kenneth K. Chow, 2009. "A Factor Analysis of Trade Integration: the Case of Asian and Oceanic Economies," Economie Internationale, CEPII research center, issue 119, pages 5-23.

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    More about this item

    Keywords

    Greater China; Trade and INvestment; Common Stochastic Trend; Synchronized and Non-Synchronized Business Cycles; Output Losses; Exchange Rate Regime;
    All these keywords.

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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