A Common Currency Peg in East Asia? Perspectives from Western Europe

Author

Hwee Kwan Chow, Singapore Management UniversityFollow
Yoonbai Kim

Publication Type

Journal Article

Publication Date

2003

Abstract

In this paper we investigate the feasibility of a common currency peg in East Asia from the perspective of Western European countries. We findthat domestic outputs of East Asian countries are strongly influencedby country-specific shocks while regional shocks are far more important in European countries that have joinedthe Economic andMonetary Union. The results are robust to various changes in specifications of the model. They suggest that East Asian countries are structurally different from each other and thus more likely to be subject to asymmetric shocks. Basedon optimum currency area grounds, a common currency peg in East Asia wouldbe more costly anddifficult to sustain

Keywords

Common currency peg in East Asia; Optimum currency area; Country-specific shocks vs. regional shocks; Economic andmonetary union

Discipline

Asian Studies | Macroeconomics | Regional Economics

Research Areas

Macroeconomics

Publication

Journal of Macroeconomics

Volume

5

Issue

3

First Page

331

Last Page

350

ISSN

0164-0704

Identifier

10.1016/s0164-0704(03)00041-7

Publisher

Elsevier

Citation

Chow, Hwee Kwan and Kim, Yoonbai. A Common Currency Peg in East Asia? Perspectives from Western Europe. (2003). Journal of Macroeconomics. 5, (3), 331-350.
Available at: https://ink.library.smu.edu.sg/soe_research/162

Additional URL

https://doi.org/10.1016/s0164-0704(03)00041-7