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

Shinji Takagi, Mototsugu Shintani () and Tetsuro Okamoto ()
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Mototsugu Shintani: Department of Economics, Vanderbilt University
Tetsuro Okamoto: Faculty of Economics, Osaka Sangyo University

No 315, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

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.

Keywords: Currency union; foreign exchange rates; Japanese economy; price convergence; San Francisco Peace Treaty; vector autoregressions (search for similar items in EconPapers)
JEL-codes: E42 F15 F33 F36 (search for similar items in EconPapers)
Date: 2003-07
New Economics Papers: this item is included in nep-his, nep-ifn, nep-mac, nep-mon and nep-sea
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Journal Article: Measuring the Economic Impact of Monetary Union: The Case of Okinawa (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:van:wpaper:0315

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