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Regional Monetary Coordination in Asia after the Global Financial Crisis: Comparison in Regional Monetary Stability between ASEAN+3 and ASEAN+3+3

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  • Eiji Ogawa

    (Professor, Hitotsubashi University and faculty fellow of Research Institute of Economy, Trade and Industry)

Abstract

This paper analyzes how much deviation we have among Asian currencies which include the Indian rupee, the Australian dollar, and the New Zealand dollar, given that we are discussing an East Asian Community based on ASEAN+3(Japan, China, and South Korea)+3(India, Australia, and New Zealand). We investigate whether intra-regional exchange rates increase in instability or deviation when the additional three countries (India, Australia, and New Zealand) join the ASEAN+3. Contribution of each currency to weighted average of AMU-wide Deviation Indicators shows that movements in the Japanese yen have contributed to those in the weighted average of the AMU-wide Deviation Indicators over time during the sample period from January 2000 to January 2010. Moreover, we use concepts of ƒÀ and ƒÐ convergences in the context of economic growth to analyze statistically convergence or divergence for the ASEAN+3+3 currencies. The addition of the Indian rupee into the ASEAN+3 currencies make the regional currencies unstable before and during the global financial crisis. Moreover, comparison between ASEAN+3+3 and ASEAN+3+Indian currencies shows that the addition of only the Indian rupee into them is relatively more stable than the addition of the Australian dollar and the New Zealand dollar as well as the Indian rupee since September 2008. It is worthy to consider that India will join the Chiang Mai Initiative to manage currency crises while the monetary authorities will conduct surveillance over stability of the intra-regional exchange rates in the near future.

Suggested Citation

  • Eiji Ogawa, 2010. "Regional Monetary Coordination in Asia after the Global Financial Crisis: Comparison in Regional Monetary Stability between ASEAN+3 and ASEAN+3+3," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 6(5), pages 837-858, June.
    • Handle: RePEc:mof:journl:ppr011d
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    File URL: http://warp.ndl.go.jp/info:ndljp/pid/9908001/www.mof.go.jp/english/pri/publication/pp_review/ppr011/ppr011d.pdf
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    References listed on IDEAS

    as
    1. Ogawa, Eiji & Ito, Takatoshi, 2002. "On the Desirability of a Regional Basket Currency Arrangement," Journal of the Japanese and International Economies, Elsevier, vol. 16(3), pages 317-334, September.
    2. OGAWA Eiji & YOSHIMI Taiyo, 2008. "Widening Deviation among East Asian Currencies," Discussion papers 08010, Research Institute of Economy, Trade and Industry (RIETI).
    3. OGAWA Eiji & YOSHIMI Taiyo, 2009. "Analysis on β and σ Convergences of East Asian Currencies," Discussion papers 09018, Research Institute of Economy, Trade and Industry (RIETI).
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    Cited by:

    1. Ogawa Eiji & Zhiqian Wang, 2013. "Amu Deviation Indicators Based On Purchasing Power Parity And Adjusted By Balassa–Samuelson Effect," Global Journal of Economics (GJE), World Scientific Publishing Co. Pte. Ltd., vol. 2(02), pages 1-22.
    2. Kuo-Chun Yeh, 2013. "An Asian Currency Unit: Simulations for Its Effects on East Asia," The World Economy, Wiley Blackwell, vol. 36(12), pages 1611-1631, December.
    3. OGAWA Eiji & Zhiqian WANG, 2012. "The AMU Deviation Indicators Based on the Purchasing Power Parity and Adjusted by the Balassa-Samuelson Effect," Discussion papers 12078, Research Institute of Economy, Trade and Industry (RIETI).
    4. Eiji Ogawa & Zhiqian Wang, 2012. "The AMU Deviation Indicators Based on the Purchasing Power Parity and Adjusted by the Balassa-Samuelson Effect," Global COE Hi-Stat Discussion Paper Series gd12-255, Institute of Economic Research, Hitotsubashi University.

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