Information and Coordination: Towards East Asian Regional Financial Integration

118 Pages Posted: 16 Jul 2009 Last revised: 12 Sep 2009

See all articles by Maria Monica Wihardja

Maria Monica Wihardja

Centre of Strategic and International Studies

Date Written: May 16, 2009

Abstract

We study how economic institutions intertwine with political institutions. A theoretical study of a simple strategic complementary game with private and public information among partially informed agents such as central banks shows that initial fundamentals might give rise to different levels of transparency. An empirical study shows that both economic fundamentals such as the reserve ratio of broad money to foreign exchange reserves and non-economic fundamentals such as an occurrence of crisis and the level of democracy do affect transparency of central banks. We apply this analysis to study the coordination effect of information on the progress towards regional financial integration among East Asian countries. We find that the progress towards regional financial integration might rely more on polity rather than on economic fundamentals.

Keywords: E61, F15, P16

JEL Classification: Policy Coordination, Economics Integration, Political Economy

Suggested Citation

Wihardja, Maria Monica, Information and Coordination: Towards East Asian Regional Financial Integration (May 16, 2009). Available at SSRN: https://ssrn.com/abstract=1434770 or http://dx.doi.org/10.2139/ssrn.1434770

Maria Monica Wihardja (Contact Author)

Centre of Strategic and International Studies ( email )

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