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International Price Linkage within a Region: The Case of East Asia

  • Fukuda, Shin-ichi
  • Kano, Takashi

This paper investigates how "prices" in East Asian economies were correlated with those in Japan and with those in the United States. The analysis is particularly noteworthy because East Asian Economies are geographically close to Japan but their currencies have been more tied to the US dollar. In the paper, we analyze two different types of "prices": The overall price levels in terms of the same currency and the relative prices among different commodities. We demonstrate that the overall price levels in East Asian economies were closely related to those in the United States. However, we also show that the relative prices in East Asian economies, especially those in Taiwan and Korea, were closely correlated with those in Japan. The results are in marked contrast with the price correlation in other regions.

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Article provided by Elsevier in its journal Journal of the Japanese and International Economies.

Volume (Year): 11 (1997)
Issue (Month): 4 (December)
Pages: 643-666

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Handle: RePEc:eee:jjieco:v:11:y:1997:i:4:p:643-666
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622903

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  20. Isard, Peter, 1977. "How Far Can We Push the "Law of One Price"?," American Economic Review, American Economic Association, vol. 67(5), pages 942-48, December.
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  24. Fukuda, Shin-ichi & Kano, Takashi, 1997. "International Price Linkage within a Region" The Case of East Asia," CIRJE F-Series 97-F-6, CIRJE, Faculty of Economics, University of Tokyo.
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