An Asian Monetary Union?
This study empirically examines whether a group of 12 Asian countries is suitable to form an Asian Monetary Union (AMU). The criteria of suitability are based on the Optimum Currency Area (OCA) literature whereby countries experiencing symmetrical shocks, have smaller size of shock and faster speed of adjustment are considered as potentially good partners in a monetary union. The Blanchard and Quah (BQ) structural vector autoregression (SVAR) methodology is used to identify the demand and supply shocks. The overall finding provides no support for the formation of a full-fledged AMU. Instead, what appears more feasible initially is the formation of smaller sub-groupings within the region.
|Date of creation:||Apr 2006|
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- Wilson, Peter, 2002. "Prospects for Asian Monetary Cooperation After the Asian Financial Crisis. Pipedream or Possible Reality?," EIJS Working Paper Series 151, The European Institute of Japanese Studies.
- van Zandweghe, Willem & Gottschalk, Jan, 2001. "Do Bivariate SVAR Models with Long-Run Identifying Restrictions Yield Reliable Results? The Case of Germany," Kiel Working Papers 1068, Kiel Institute for the World Economy (IfW).