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Exchange Rate Fixation between US, China, Japan and Eurozone

Author

Listed:
  • Chee-Heong Quah

    (Chee-Heong Quah is at the Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur 50603, Malaysia, email: quahch@um.edu.my)

Abstract

This article assesses the feasibility of exchange rate fixation among the largest economies today, namely, the US, Japan, China and Germany/Eurozone, by reviewing variables according to the optimum currency areas framework. The hypothesis is that with greater interconnectedness in general through time there should be greater convergence in the monetary integration dimensions. The period examined spans from 1980 to 2012, an over-30-year period, encompassing the recent episode of global contraction. While the findings are mixed, economically they seem to suggest a general trend towards greater compatibility or at least one which is not in serious contradiction to exchange rate fixity, particularly for the US and Eurozone. JEL Classification: E62, F31, F32, F41, F42, O53

Suggested Citation

  • Chee-Heong Quah, 2017. "Exchange Rate Fixation between US, China, Japan and Eurozone," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 11(2), pages 99-120, May.
    • Handle: RePEc:sae:mareco:v:11:y:2017:i:2:p:99-120
    DOI: 10.1177/0973801016689206
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    References listed on IDEAS

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    1. Frankel, Jeffrey A & Rose, Andrew K, 1998. "The Endogeneity of the Optimum Currency Area Criteria," Economic Journal, Royal Economic Society, vol. 108(449), pages 1009-1025, July.
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    1. Quah Chee-Heong, 2019. "China’s Dollar-linked Hong Kong during the Global Crisis," Apuntes del Cenes, Universidad Pedagógica y Tecnológica de Colombia, vol. 38(67), pages 95-121, February.

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    More about this item

    Keywords

    Currency Area; United States; China; Japan; Euro; Exchange Rate; Money; Currency; Dollar; Deficit;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • 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
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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