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Is Economic Development Promoting Monetary Integration in East Asia?

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  • KAWASAKI Kentaro
  • WANG Zhiqian

Abstract

This paper aims to investigate whether there exist international integrated markets among East Asian economies by employing the generalized purchasing power parity (G-PPP) model, which then would help to suggest whether or not the East Asian region is an optimum currency area (OCA). The empirical results in this paper suggest that holding the G-PPP among nine Asian countries (China, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Thailand, and Vietnam) is more applicable in 2000-2013 than in 1984-1997. In the period of "globalization," which is characterized by the expansion of world trade, an increase of international capital flows, and development of information and communications technologies, Asian economic development has been promoting not only economic integrations but also constructing the stable linkages of real exchange rates. Therefore, it would be helpful to adopt regional coordination for monetary policies to assure the feasibility of a possible monetary union.

Suggested Citation

  • KAWASAKI Kentaro & WANG Zhiqian, 2015. "Is Economic Development Promoting Monetary Integration in East Asia?," Discussion papers 15052, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:15052
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance
    • F2 - International Economics - - International Factor Movements and International Business
    • F3 - International Economics - - International Finance
    • 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

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