ARE THE "ASEAN PLUS THREE" COUNTRIES COMING CLOSER TO AN OPTIMUM CURRENCY AREA?

Kentaro Kawasaki

China Economic Policy Review (CEPR), 2012, vol. 01, issue 02, 1-31

Abstract: This paper aims to investigate whether the East Asian countries — ASEAN5, China, Korea, and Japan — have developed a matching "Optimum Currency Area (OCA) theory" in recent years because the establishment of stable exchange rate linkages and the enhancement of monetary policy credibility are needed for further economic developments in East Asia. In developing the earlier generalized purchasing power parity (G-PPP) model into an up-to-date nonlinear econometric model and considering the adoption of the Asian Monetary Unit (AMU) into this area, this paper could have positive empirical results, which suggest for forming a common currency area in East Asia.

Keywords: OCA; exchange rate; M-TAR; co-integration with thresholds adjustment; F31; F33; F36 (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1142/S1793969012500112

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