An Output Perspective on a Northeast Asia Currency Union

Yin-Wong Cheung and Jude Yuen

No 1250, CESifo Working Paper Series from CESifo

Abstract: The prospect of creating a currency union consisting of China, Japan, and Korea is evaluated using output data. After a brief discussion on the interactions between the three countries, the study investigates whether these three countries have common synchronous business cycles, which are perceived as one of the preconditions of a currency union. Then, we assess the potential costs of giving up monetary policy autonomy to form a currency union. It is found that the three national output series tend to move together in the long run and share common business cycles. While the output loss estimates depend on assumptions used to generate shocks, they tend to be small. However, there are potential conflicts between these countries on the choice of the policy target of the common monetary authorities.

Keywords: common stochastic trend; business cycles; output losses; exchange rate regime; Asian economies (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-fin, nep-ifn and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Working Paper: An Output Perspective on a Northeast Asia Currency Union (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1250

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