IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v36y2004i10p1031-1043.html
   My bibliography  Save this article

Is a monetary union feasible for East Asia?

Author

Listed:
  • Zhaoyong Zhang
  • Kiyotaka Sato
  • Michael McAleer

Abstract

The empirical suitability of the East Asian economies for potential monetary integration is assessed. The structural vector autoregression (VAR) method is employed to identify the underlying shocks using a three-variable VAR model across the East Asian economies. The estimates of the EEC are used as a benchmark to compare the size of the underlying shocks and the speed of adjustment to shocks in both regions to determine the feasibility of forming an optimum currency area (OCA) in East Asia. The empirical results do not display strong support for forming an OCA in the East Asian region. The results do imply, however, that some small subregions are potential candidates for OCAs, since their disturbances are correlated and small and these economies adjust rapidly to shocks.

Suggested Citation

  • Zhaoyong Zhang & Kiyotaka Sato & Michael McAleer, 2004. "Is a monetary union feasible for East Asia?," Applied Economics, Taylor & Francis Journals, vol. 36(10), pages 1031-1043.
  • Handle: RePEc:taf:applec:v:36:y:2004:i:10:p:1031-1043
    DOI: 10.1080/0003684042000246740
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/0003684042000246740
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    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.
    2. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-673, September.
    3. Maria Demertzis & Andrew Hallett & Ole Rummel, 2000. "Is the European union a natural currency area, or is it held together by policy makers?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(4), pages 657-679, December.
    4. Tamim Bayoumi & Barry Eichengreen, 1992. "Shocking Aspects of European Monetary Unification," NBER Working Papers 3949, National Bureau of Economic Research, Inc.
    5. George S. Tavlas, 1993. "The ‘New’ Theory of Optimum Currency Areas," The World Economy, Wiley Blackwell, vol. 16(6), pages 663-685, November.
    6. Bayoumi, Tamim & Eichengreen, Barry & Mauro, Paolo, 2000. "On Regional Monetary Arrangements for ASEAN," Journal of the Japanese and International Economies, Elsevier, vol. 14(2), pages 121-148, June.
    7. Chow, Hwee Kwan & Kim, Yoonbai, 2003. "A common currency peg in East Asia? Perspectives from Western Europe," Journal of Macroeconomics, Elsevier, vol. 25(3), pages 331-350, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nagayasu, Jun, 2010. "Macroeconomic interdependence in East Asia," Japan and the World Economy, Elsevier, vol. 22(4), pages 219-227, December.
    2. Lee, Grace H.Y. & Koh, Sharon G.M., 2012. "The prospects of a monetary union in East Asia," Economic Modelling, Elsevier, vol. 29(2), pages 96-102.
    3. Vu Tuan Khai, 2009. "Re-examining Symmetry of Shocks for East Asia: Results Using a VAR with Sign Restrictions," Global COE Hi-Stat Discussion Paper Series gd08-042, Institute of Economic Research, Hitotsubashi University.
    4. Sato, Kiyotaka & Zhang, Zhaoyong & McAleer, Michael, 2011. "Identifying shocks in regionally integrated East Asian economies with structural VAR and block exogeneity," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 81(7), pages 1353-1364.
    5. Eiji Ogawa & Kentaro Kawasaki, 2011. "Monetary Integration in East Asia," Chapters,in: The Economics of East Asian Integration, chapter 10 Edward Elgar Publishing.
    6. Boldea, O. & Engwerda, J.C. & Michalak, T. & Plasmans, J.E.J. & Salmah, S., 2011. "A Simulation Study of an ASEAN Monetary Union (Replaces CentER DP 2010-100)," Discussion Paper 2011-098, Tilburg University, Center for Economic Research.
    7. Sato, Kiyotaka & Zhang, Zhaoyong & Allen, David, 2009. "The suitability of a monetary union in East Asia: What does the cointegration approach tell?," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 79(9), pages 2927-2937.
    8. Adom, Assandé Désiré & Sharma, Subhash C. & Morshed, A.K.M. Mahbub, 2010. "Economic integration in Africa," The Quarterly Review of Economics and Finance, Elsevier, vol. 50(3), pages 245-253, August.
    9. Zhang, Zhaoyong & Sato, Kiyotaka & McAleer, Michael, 2008. "Is Greater China a currency union?," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 78(2), pages 319-327.
    10. Binner, Jane & Chen, Shu-Heng & Lai, Ke-Hung & Mullineux, Andrew & Swofford, James L., 2011. "Do the ASEAN countries and Taiwan form a common currency area?," Journal of International Money and Finance, Elsevier, vol. 30(7), pages 1429-1435.
    11. Alberto Coco & Andrea Silvestrini, 2017. "The nature and propagation of shocks in the euro area: a comparative SVAR analysis," International Journal of Computational Economics and Econometrics, Inderscience Enterprises Ltd, vol. 7(1/2), pages 95-114.
    12. Genberg, Hans & Siklos, Pierre L., 2010. "Revisiting the shocking aspects of Asian monetary unification," Journal of Asian Economics, Elsevier, vol. 21(5), pages 445-455, October.
    13. Md. Abdur Rahman Forhad, 2014. "How many currencies in Saarc countries? a multivariate structural var approach," Journal of Developing Areas, Tennessee State University, College of Business, vol. 48(4), pages 265-286, October-D.
    14. Mishra, Ritesh Kumar & Sharma, Chandan, 2010. "Real exchange rate behavior and optimum currency area in East Asia: Evidence from Generalized Purchasing Power Parity," International Review of Financial Analysis, Elsevier, vol. 19(3), pages 205-213, June.
    15. Chen, Xiaofen, 2012. "The dampening effect of bank foreign liabilities on monetary policy: Revisiting monetary cooperation in East Asia," Journal of International Money and Finance, Elsevier, vol. 31(2), pages 412-427.
    16. Watanabe, Shingo & Ogura, Masanobu, 2010. "How far apart are the two ACUs from each other? Asian currency unit and Asian currency union," Emerging Markets Review, Elsevier, vol. 11(2), pages 152-172, June.
    17. Engwerda, J. & Boldea, O. & Michalak, T. & Plasmans, J. & Salmah,, 2012. "A simulation study of an ASEAN monetary union," Economic Modelling, Elsevier, vol. 29(5), pages 1870-1890.
    18. Bashar, Omar H.M.N., 2012. "The dynamics of aggregate demand and supply shocks in ASEAN countries," Journal of Asian Economics, Elsevier, vol. 23(5), pages 507-518.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:36:y:2004:i:10:p:1031-1043. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.