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| Content Provider | Springer Nature Link |
|---|---|
| Author | Zhang, Zhaoyong Sato, Kiyotaka |
| Copyright Year | 2007 |
| Abstract | The paper attempts to evaluate the prospect of creating a currency union in the “Greater China” economic area. Despite of the political deadlock and military confrontation in the Taiwan Strait, the Greater China area has experienced rapid and spontaneous regional integration in the past decades as a result of increasingly cross-border trade, foreign direct investment (FDI), technology contracts, and other arrangements in accordance with changes in comparative advantage and industrial upgrading in these economies. In this study, we focus on the symmetry in shocks that is perceived as one of the major preconditions of a currency union. In contrast to the previous studies, we investigate the time-varying correlation of supply, REER and monetary shocks by using the Kalman filter technique to assess the dynamic changes in structural similarity and convergence among the Greater China economies. We also examine the costs of forming a currency union in the area due to the loss of monetary autonomy in each economy. Our results suggest that there is a rising structural symmetry between the Greater China economies, and this area has become increasingly a better candidate for a monetary union. |
| Starting Page | 355 |
| Ending Page | 370 |
| Page Count | 16 |
| File Format | |
| ISSN | 09237992 |
| Journal | Open Economies Review |
| Volume Number | 19 |
| Issue Number | 3 |
| e-ISSN | 1573708X |
| Language | English |
| Publisher | Springer US |
| Publisher Date | 2007-05-22 |
| Publisher Place | Boston |
| Access Restriction | One Nation One Subscription (ONOS) |
| Subject Keyword | Optimum currency area Structural shocks Vector autoregression Kalman filter Output losses Greater China Development Economics International Economics |
| Content Type | Text |
| Resource Type | Article |
| Subject | Economics and Econometrics |
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