Is Greater China a currency union?

Zhaoyong Zhang, Kiyotaka Sato and Michael McAleer

Mathematics and Computers in Simulation (MATCOM), 2008, vol. 78, issue 2, 319-327

Abstract: With the rapid flow of knowledge and capital from Hong Kong and Taiwan to Mainland China, a dynamic economy of “Greater China” has emerged, making the Chinese trio increasingly interdependent on trade and investment. In this paper we develop a three-variable VAR model to assess empirically the feasibility of forming a currency union in the Greater China area. The empirical results suggest that, from an economic perspective, it is feasible for the Chinese trio to move toward a currency union because of the increasing symmetry of shocks, the dynamic economic integration among the Greater China economies, and the speed of adjustment to shocks.

Keywords: OCA; Structural shocks; Kalman filter; Greater china (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:matcom:v:78:y:2008:i:2:p:319-327

DOI: 10.1016/j.matcom.2008.01.008

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