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Title:An output perspective on a northeast Asia currency union PDF Logo
Authors:Cheung, Yin-Wong
Yuen, Jude
Issue Date:2004
Series/Report no.:CESifo working papers 1250
Abstract:The prospect of creating a currency union consisting of China, Japan, and Korea is evaluated using output data. After a brief discussion on the interactions between the three countries, the study investigates whether these three countries have common synchronous business cycles, which are perceived as one of the preconditions of a currency union. Then, we assess the potential costs of giving up monetary policy autonomy to form a currency union. It is found that the three national output series tend to move together in the long run and share common business cycles. While the output loss estimates depend on assumptions used to generate shocks, they tend to be small. However, there are potential conflicts between these countries on the choice of the policy target of the common monetary authorities.
Subjects:common stochastic trend
business cycles
output losses
exchange rate regime
Asian economies
JEL:F41
F33
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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