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Economic Feasibility of Malaysia and Singapore-Brunei Monetary Reunion: A Scrutiny during Major Financial Crises

Author

Listed:
  • Quah, Chee-Heong

    (Faculty of Business and Accountancy, University of Malaya, Malaysia)

  • Ho, Yew-Joe

    (School of Economics and Management, Xiamen University Malaysia, Malaysia)

Abstract

This paper attempts to assess the feasibility of Malaysia to rejoin the monetary union with Singapore and Brunei, which it left in 1973. The study scrutinizes in particular the period of two impactful financial crises in the last decades, namely, the Asian Financial Crisis in 1997 and the US subprime-caused Global Financial Crisis in 2007-2009. Assessment is made in terms of the real convergence criteria suggested by the optimum currency areas (OCA) theory and the nominal convergence criteria specified by the Maastricht Treaty. In light of the endogeneity view of convergence criteria, the relevant features of Malaysia are evaluated against those of Singapore and Brunei to infer the degree of preparedness of Malaysia to access the prevailing Singapore-Brunei monetary union. Results suggest that Malaysia could be as good a candidate as Brunei as a monetary union member with Singapore.

Suggested Citation

  • Quah, Chee-Heong & Ho, Yew-Joe, 2020. "Economic Feasibility of Malaysia and Singapore-Brunei Monetary Reunion: A Scrutiny during Major Financial Crises," Asian Journal of Applied Economics/ Applied Economics Journal, Kasetsart University, Faculty of Economics, Center for Applied Economic Research, vol. 27(1), pages 23-51, June.
    • Handle: RePEc:ris:apecjn:0037
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    More about this item

    Keywords

    optimum currency area; monetary union; business cycle; Singapore; Brunei; Malaysia;
    All these keywords.

    JEL classification:

    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F15 - International Economics - - Trade - - - Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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