A Currency Union in East Asia

51 Pages Posted: 23 Jun 2003

See all articles by Jong-Wha Lee

Jong-Wha Lee

Korea University

Yung Chul Park

Korea University - Department of Economics

Kwanho Shin

Korea University

Date Written: March 2003

Abstract

This paper investigates prospects of a currency union in East Asia, focusing on trade and financial integration occurring in the region. We find, based on a dynamic factor model, regional common shocks have been quantitatively important for output variations in the Asian economies. We expect that continuing trade integration in the region will lead to further synchronization of business cycles, thereby encouraging East Asian countries to create a currency union in the region. In contrast to trade, however, financial liberalization in East Asia tends to lead to more global integration, rather than regional integration, of the financial systems, and thereby is not likely to develop favorable conditions for forming a regional currency union among East Asian countries.

Keywords: Currency Union, East Asia, Trade Integration, Financial Integration

JEL Classification: E32, F33, F15, F36

Suggested Citation

Lee, Jong-Wha and Park, Yung Chul and Shin, Kwanho, A Currency Union in East Asia (March 2003). ISER Discussion Paper No. 571. Available at SSRN: https://ssrn.com/abstract=396260 or http://dx.doi.org/10.2139/ssrn.396260

Jong-Wha Lee

Korea University ( email )

Anam-dong, Sungbuk-Ku
Dept. of Economics
Seoul, 136-701
82-2-3290-2216 (Phone)
82-2-928-4948 (Fax)

Yung Chul Park

Korea University - Department of Economics ( email )

Anam-dong, Sungbuk-Ku
Seoul, 136-701
Korea

Kwanho Shin (Contact Author)

Korea University ( email )

1 Anam-dong 5 ka
Sunbuk-Ku, Department of Economics
Seoul 136-701
Korea
82-2-3290-2220 (Phone)
82-2-3290-2719 (Fax)

HOME PAGE: econ.korea.ac.kr/~khshin

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