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Suggestions for an East Asian Monetary Union: Focusing on the Effects of Monetary Integration on Bilateral Trade

Author

Listed:
  • Ko, Min-Chang

    (National Health Insurance Service)

  • Cho, Byung-Taik

    (Hanyang University)

Abstract

This study explores alternative ways toward the East Asian monetary union, focusing on the effect of monetary integration on bilateral trade. For this purpose, we analyze with gravity model changes of the bilateral trade among countries of EU, NAFTA, and East Asia. A distinctive feature of this model is that it includes the dummy variables that show the cultural intimacy among North-East Asian countries, Asian NIEs countries, and East Asian countries (North-East Asian and ASEAN countries). We discovered that bilateral trade increased at a highest level among East Asian countries than the other two cases. This result suggests that the once-and-for-all strategy to develop an East Asian monetary union including North-East Asian and ASEAN countries would be more efficient than the multitrack strategy that forms the monetary union of North-East Asian countries in the first place and then tries to extend it to ASEAN countries.

Suggested Citation

  • Ko, Min-Chang & Cho, Byung-Taik, 2006. "Suggestions for an East Asian Monetary Union: Focusing on the Effects of Monetary Integration on Bilateral Trade," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 10(1), pages 131-157, June.
    • Handle: RePEc:ris:eaerev:0170
    DOI: 10.11644/KIEP.JEAI.2006.10.1.154
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    More about this item

    Keywords

    Monetary Integration; East Asian Monetary Union; Gravity Model; Trade Dependence Index; Trade Intensity Index;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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