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A Comment on Empirical Estimation of Patterns of Shocks Utilizing the VAR Methodology on Developing Countries


  • Matangi Maskay, Nephil

    () (College of Wooster)


What is a countr y’s optimal choice of an exchange rate regime? One avenue which has gained prominence is the Optimum Currency Area criteria of pattems of shocks which suggests that a flexible exchange rate may be less costly for regions who face asymmetric shocks, since they are forced to have conflicting policy responses, and vice versa.1 While there are a number of methodologies to calculate the pattems of shocks, the VAR methodology, which results from a technique introduced in Bayoumi and Eichengreen á[1992, 1994]; B&E from now onñ, may be at present one of the most popular. In the estimation of their model the authors have introduced some “over-identifying conditions”2 (called OIC from now on) which confirm the validity of their decomposition.

Suggested Citation

  • Matangi Maskay, Nephil, 1998. "A Comment on Empirical Estimation of Patterns of Shocks Utilizing the VAR Methodology on Developing Countries," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 13, pages 544-548.
  • Handle: RePEc:ris:integr:0086

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    Cited by:

    1. Alicia Garcia-Herrero, 2014. "How Close is Asia to an Optimal Currency Area in Terms of Business Cycle Co-Movement?," IMES Discussion Paper Series 14-E-12, Institute for Monetary and Economic Studies, Bank of Japan.
    2. Nephil Matangi Maskay, 2003. "Patterns of Shocks and Regional Monetary Cooperation in South Asia," IMF Working Papers 03/240, International Monetary Fund.

    More about this item


    Empirical Estimation; VAR Methodology;

    JEL classification:

    • F10 - International Economics - - Trade - - - General


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