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Prospects for a Chinese currency area: simulations of Robert Mundell's multi‐currency monetary union

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  • Kuo‐chun Yeh

Abstract

Based on Robert Mundell's proposal for an Asian multi‐currency monetary union, this paper provides a framework to analyze whether a prospective Chinese currency union can be sustained after suffering from various shocks. An important assumption is that China and Taiwan can coordinate their economic policies without losing their independent national currencies. A dynamic game approach simulates possible outcomes if a China–Taiwan cooperative mechanism were to be implemented. The results show that the China–Taiwan coalition can be feasible under the shock of currency appreciation.

Suggested Citation

  • Kuo‐chun Yeh, 2008. "Prospects for a Chinese currency area: simulations of Robert Mundell's multi‐currency monetary union," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 11(4), pages 247-260.
    • Handle: RePEc:taf:jecprf:v:11:y:2008:i:4:p:247-260
    DOI: 10.1080/17487870802556532
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    References listed on IDEAS

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    1. Daniel H. Rosen & Nicholas Lardy, 2004. "Prospects for a US-Taiwan Free Trade Agreement," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa73, October.
    2. Robert Mundell, 2000. "Currency Areas, Exchange Rate Systems and International Monetary Reform," Journal of Applied Economics, Universidad del CEMA, vol. 3, pages 217-256, November.
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