Abstract
East Asian economies have exhibited high economic growth over the last several decades, while economic interdependence among them has grown substantially through trade and investment. The recent surge in free trade agreements (FTAs) in the East Asian region is further evidence of growing economic linkage. A natural question is, therefore, whether monetary arrangement is feasible in the East Asian region on the basis of this deepening interdependence. Whereas it is generally reckoned that most East Asian economies adopted the de facto US dollar pegged exchange rate system, the Asian currency crisis in 1997/98 focused renewed attention on regional exchange rate arrangements. It is currently a matter of much interest which exchange rate arrangement is most suitable for East Asian economies — independent floating, a basket pegged exchange rate, or a common currency.1 Before answering this question, we first need to explore whether East Asian economies meet the necessary preconditions for adopting a fixed exchange rate regime.
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Sato, K. (2007). East Asian Monetary Integration: an Empirical Assessment of the Optimum Currency Area Criteria. In: Mitsuo, H. (eds) New Developments of the Exchange Rate Regimes in Developing Countries. IDE-JETRO Series. Palgrave Macmillan, London. https://doi.org/10.1057/9780230625556_6
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DOI: https://doi.org/10.1057/9780230625556_6
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