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Is Economic Development Promoting Monetary Integration in East Asia?

Author

Listed:
  • Kentaro Kawasaki

    (Faculty of Business Administration, Toyo University, 5-28-20, Hakusan, Bunkyo-ku, Tokyo 112-8606, Japan
    These authors contributed equally to this work.)

  • Zhi-Qian Wang

    (Faculty of Commerce and Management, Hitotsubashi University, 2-1 Naka, Kunitachi, Tokyo 186-8601, Japan
    These authors contributed equally to this work.)

Abstract

This paper tries to investigate whether there exist international integrated markets among East Asian economies, by employing the Generalized Purchasing Power Parity (G-PPP) model, then, it would help to suggest whether the East Asian region is the Optimum Currency Area (OCA) or not. The empirical results in this paper suggest that holding the G-PPP among nine Asian countries (China, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam) becomes more applicable in 2000–2013 than of that in 1984–1997. In the period of “globalization,” which is characterized by expansion of world trade, increase of international capital flows, and development of information and communications technologies, Asian economic development has been promoting not only economic integrations but also constructing the stable linkages of real exchange rates. Therefore, it would help to adopt regional coordination for monetary policies to assure the feasibility of a possible monetary union.

Suggested Citation

  • Kentaro Kawasaki & Zhi-Qian Wang, 2015. "Is Economic Development Promoting Monetary Integration in East Asia?," IJFS, MDPI, vol. 3(4), pages 1-31, October.
    • Handle: RePEc:gam:jijfss:v:3:y:2015:i:4:p:451-481:d:56897
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    References listed on IDEAS

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    More about this item

    Keywords

    OCA; exchange rate; M-TAR; co-integration with thresholds adjustment;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance
    • F2 - International Economics - - International Factor Movements and International Business
    • F3 - International Economics - - International Finance
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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