Real Effects of Common Currencies in East Asia, Issues 2007-2166Since the 1997 Asian currency crisis, new interest has emerged in the formation of a common currency area in East Asia. This paper provides estimates of trade and welfare effects of East Asian currency unions, using a micro-founded gravity model. Counter-factual experiments to assess the effects of various hypothetical currency arrangements for East Asia suggest that an East Asian currency union will double bilateral trade in the region, but the resulting welfare effects will be moderate. However, if Japan, a major trade partner for East Asia, is included in the union, welfare effects increase substantially. The evidence thus suggests that certain regional currency arrangements in East Asia will stimulate regional trade rigorously and can generate economically significant welfare gains. |
Common terms and phrases
Andrew K arrangements in East ASEAN Asian currency union Asian Development Bank Australia average percentage increase China common currency arrangements common currency effects conduct comparative statics country dummies currency in East currency union effects dollar peg dollar zone EA EA East Asia East Asian countries East Asian currency East Asian economies Economic Effect of Common equilibrium model estimates of ẞ2 Exchange Rate Policies forming a currency Frankel gravity equation Hong Kong Hong Kong S.A.R. increase in trade increase in welfare increase the welfare Indonesia Japanese yen Korea Malaysia member countries multilateral resistance multilateral trade resistance Optimum Currency Area pair of countries parameters regional currency arrangements regional currency union robustness checks Singapore single currency Standard errors Table trade and welfare trade barriers trade effects trade resistance terms trade-creating effects U.S. dollar unilateral arrangements unilateral currency unions union with Japan United variable welfare effects welfare gains welfare increases Zealand zero otherwise
References to this book
Cultural Advantage for China. Tale of Six Cities Fu Yuhua,Florentin Smarandache,V. Christianto No preview available - 2009 |