This paper investigates prospects of a currency union in East Asia, focusing on trade and financial integration occurring in the region. We find, based on a dynamic factor model, regional common shocks have been quantitatively important for output variations in the Asian economies. We expect...

In recent years, dynamic debate has arisen as to the desirability and feasibility of creating a monetary union in East Asia. While the debate has relied heavily on the theory of optimum currency areas, this theory has weaknesses in explaining the actual formation of monetary unions. At this...

Among others, this paper presents the case for fixed exchange rates and monetary union in East Asia, the underlying motivation behind the rising interest on optimum currency areas (OCAs) in the Asian context. The paper also explicitly proposes the dollar as the monetary anchor. Twenty empirical...

It has been a hot debit whether a monetary union is feasible in the East Asian region. Most of the existing studies focus on the symmetric issue of the fundamental shocks and the extent of correlation by applying the Blanchard and Quah (1989) structural vector autoregression (VAR) technique,...

The paper analyses the role of monetary policy for cyclical movements of investment and asset markets in East Asia and Europe based on a Mises-Hayek overinvestment framework. It is shown how the gradual global decline of interest rates has triggered wandering overinvestment cycles in Japan,...