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Measuring the Economic Impact of Monetary Union: The Case of Okinawa

Author

Listed:
  • Shinji Takagi

    (International Monetary Fund)

  • Mototsugu Shintani

    (Vanderbilt University)

  • Tetsuro Okamoto

    (Osaka Sangyo University)

Abstract

Data from Okinawa's monetary union with the United States in 1958 and with Japan in 1972 are used to obtain a quantitative indication of how monetary union might affect the behavior of nominal and real shocks across two economies. With monetary union, the variance of the real exchange rate between two economies declines, and their business cycle linkage becomes stronger. A VAR analysis of output and price data for Okinawa and Japan further indicates that the contribution of asymmetric nominal shocks in business cycles becomes smaller. Monetary union thus seems to facilitate both nominal and real convergence. © 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Shinji Takagi & Mototsugu Shintani & Tetsuro Okamoto, 2004. "Measuring the Economic Impact of Monetary Union: The Case of Okinawa," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 858-867, November.
    • Handle: RePEc:tpr:restat:v:86:y:2004:i:4:p:858-867
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    Cited by:

    1. Takagi, Shinji, 2026. "Fugitive or Orphan? The Shanghai Yen in the Early Days of the Sino-Japanese War, 1938-1939," AGI Working Paper Series 2026-04, Asian Growth Research Institute.
    2. Kano, Kazuko & Kano, Takashi, 2021. "Welfare Costs of Exchange Rate Fluctuations: Evidence from the 1972 Okinawa Reversion," Discussion paper series HIAS-E-114, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    3. Nagayasu, Jun, 2010. "Regional Inflation (Price) Behaviors: Heterogeneity and Convergence," MPRA Paper 25430, University Library of Munich, Germany.
    4. Nagayasu, Jun, 2011. "Heterogeneity and convergence of regional inflation (prices)," Journal of Macroeconomics, Elsevier, vol. 33(4), pages 711-723.

    More about this item

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F15 - International Economics - - Trade - - - Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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