Exchange Rate Shocks and Assessing the Prospect of a Common Currency Union in East Asia

21 Pages Posted: 14 Nov 2012 Last revised: 13 Feb 2013

See all articles by Ruhul Salim

Ruhul Salim

Curtin University - Curtin Business School; Curtin University - Centre for Research in Applied Economics

Sharriar Kabir

Monash University - Sunway Campus

Date Written: November 14, 2012

Abstract

This article investigates the role of real exchange rates on the ASEAN integration process by using a VAR model estimated for each ASEAN member with data for 1960 through 2010. Empirical results show that there is substantial heterogeneity among the ASEAN economies and demonstrate no significant impact of real exchange rate shocks on ASEAN trade. The study suggests that the ASEAN common currency would not provide a trade benefits additional to those from the ongoing integration process.

Keywords: Real Exchange Rate, Trade, Vector Auto-regression

JEL Classification: F15, C22, F36, F17

Suggested Citation

Salim, Ruhul and Kabir, Sharriar, Exchange Rate Shocks and Assessing the Prospect of a Common Currency Union in East Asia (November 14, 2012). Available at SSRN: https://ssrn.com/abstract=2175391 or http://dx.doi.org/10.2139/ssrn.2175391

Ruhul Salim (Contact Author)

Curtin University - Curtin Business School ( email )

GPO Box U1987
Perth, WA WA
Australia

Curtin University - Centre for Research in Applied Economics ( email )

GPO Box U1987
Perth, Western Australia 6845
Australia

Sharriar Kabir

Monash University - Sunway Campus

Jalan Lagoon Selatan
Selangor Darul Ehsan
Selangor, 46150
Malaysia

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