Study of the East-Asian currency union

• Main Authors: Jih-Han Yang, 楊智涵
• Other Authors: Shikuan Chen
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/69089860071461222651

碩士 === 國立臺灣大學 === 國際企業學研究所 === 102 === Affected by the Asian financial crisis in 1997 and the global financial crisis in 2009, Asian countries have noticed the importance of regional cooperation to stabilize national economies. Forming a currency union is one way of regional cooperation, which can minimize transaction costs incurred and accelerate cross-region trades. This paper follows the optimal currency area model by Bayoumi and Eichengreen(1997) to examine the possibility of forming a monetary union in Asian countries. 12 countries selected to investigate empirically whether there are any groupings of East Asian economies, including Japan, Korea, China, Hong Kong, Taiwan, Singapore, Malaysia, Philippine, Thailand, Indonesia, Australia, and New Zealand. The data contains 66 samples within 30 years. The paper conducts the ordinal least square method to analyze the exchange rate variation affected by the economic variables, such as the difference of output variations, the size of nations, the openness of trade, the difference of inflation variations and the difference of real interest rates. Based on the regression, prediction of the trends of the optimal currency index is made. The paper concludes that there is possibility for Asian countries to form a currency union. China is the first choice to be the anchor of currency union, and Australia should be chosen as a partial anchor for the south part of Asian countries.