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The Post-Crisis Sequencing of Economic Integration in Asia: Trade as a Complement to a Monetary Future

Author

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  • Michael G. Plummer

    (Johns Hopkins University SAIS-Bologna, Italy; The Rimini Centre for Economic Analysis, Italy)

  • Ganeshan Wignaraja

    (Asian Development Bank)

Abstract

Bilateral and regional cooperation initiatives in Asia have been growing in importance over the last five years. These accords span the real and financial sectors; rather than following the more typical pattern of Òtrade first, money laterÓ, recent policy initiatives involve the simultaneous implementation of trade and monetary/financial accords. Given this sequence, is there a case for monetary union in East Asia? Is there a case for expanded free-trade areas (FTAs) in the region? This paper attempts to answer these questions using a variety of empirical techniques, including a Computational General Equilibrium (CGE) model, to evaluate the economics of monetary/financial integration and various configurations of FTAs in Asia. We conclude that, at present, the post-sequencing of economic integration in Asia is developing such that trade agreements will ultimately complement the movement toward financial and monetary integration. While the political constraint on monetary union is real, it is argued that FTAs should help relax this constraint, adding a political complement to the trade complement.

Suggested Citation

  • Michael G. Plummer & Ganeshan Wignaraja, 2007. "The Post-Crisis Sequencing of Economic Integration in Asia: Trade as a Complement to a Monetary Future," Working Paper series 12_07, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:12_07
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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