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Economic Preconditions for Monetary Integration in East Asia

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  • Junichi Goto

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

Asian Financial Crisis gave a devastating impact on East Asian countries, which had been enjoying good economic performance. As a result, there emerged various initiatives for monetary cooperation in order to avoid the next crisis in the region. However, there are pros and cons on the regional financial integration and cooperation in Asia. Some argue that in order to avoid the next Asian Financial Crisis, Asian countries must closely united with each other, and others argues that regional attempts, whether financial cooperation or trading arrangement, may undermine the global efforts. In view of the above, the purpose of this paper is to examine whether East Asian countries (or subset of them) constitute a preferable grouping for monetary cooperation and integration. I examine the degree of interdependence of East Asia in terms of trade, labor and macroeconomic variables. The results of the examination suggest that economic preconditions for monetary integration are met, and there is indeed a case for financial integration and cooperation in East Asia.

Suggested Citation

  • Junichi Goto, 2002. "Economic Preconditions for Monetary Integration in East Asia," Discussion Paper Series 132, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:132
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp132.PDF
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    References listed on IDEAS

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    1. Jeffrey A. Frankel & Andrew K. Rose, 2000. "Estimating the Effect of Currency Unions on Trade and Output," NBER Working Papers 7857, National Bureau of Economic Research, Inc.
    2. Junichi Goto & Koichi Hamada, 1994. "Economic Preconditions for Asian Regional Integration," NBER Chapters, in: Macroeconomic Linkage: Savings, Exchange Rates, and Capital Flows, pages 359-388, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Toan Nguyen, 2010. "An analysis of East Asian currency area: Bayesian dynamic factor model approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 24(1), pages 103-117.

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