How much intraregional exchange rate variability could a currency union remove? The case of ASEAN+3
A multilateral currency union removes the intraregional exchange rates but not the union rate variability with the rest of the world. The intraregional exchange rate variability is thus latent. A two-step procedure is developed to measure the variability. The measured variables are used to model inflation and intraregional trade growth of individual union members. The resulting models form the base for counterfactual simulations of the union impact. Application to ASEAN+3 shows that the intraregional variability consists of mainly short-run shocks, which have significantly affected the inflation and trade growth of major ASEAN+3 members, and that a union would reduce inflation and promote intraregional trade on the whole but the benefits facing each member vary and may not be significant enough to warrant a vote for the union.
Year of publication: |
2008
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Authors: | Qin, Duo ; Tan, Tao |
Publisher: |
London : Queen Mary University of London, Department of Economics |
Subject: | Währungsunion | Wechselkurs | Inflationsrate | Außenwirtschaft | ASEAN-Staaten | currency union | latent variables | dynamic factor model | simulation |
Saved in:
freely available
Series: | Working Paper ; 631 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 574525645 [GVK] hdl:10419/55151 [Handle] |
Classification: | F02 - International Economic Order; Economic Integration and Globalization: General ; F40 - Macroeconomic Aspects of International Trade and Finance. General ; O19 - International Linkages to Development; Role of International Organizations ; O53 - Asia including Middle East |
Source: |
Persistent link: https://www.econbiz.de/10010280736
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