Convergence and Its Implications for a Common Currency in ASEAN

Bunyaratavej, Kraiwinee; Hahn, Eugene D.

doi:10.1355/ae20-1d

Cited by 10 publications

(4 citation statements)

References 10 publications

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“…Although the dispersion of GDP per capita for the region as a whole has fallen since the mid‐1970s, this is not the case for the ASEAN‐4 (Indonesia, Malaysia, the Philippines, and Thailand), which, although fluctuating, is currently around the level of the late 1970s. Lim and McAleer (2004), Kim (2001), and Bunyaratavej and Hahn (2003) show a lack of sigma convergence for ASEAN as a whole.…”

Section: Elements Of Cooperation and Steps Aheadmentioning

confidence: 98%

Macroeconomic Linkages and Regional Monetary Cooperation: Steps Ahead*

Brouwer

Ramayandi

Turvey³

2006

Asian Economic Policy Review

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There is a growing appetite for economic cooperation in East Asia. Although the region has forums to facilitate this, economic cooperation has focussed largely on discussion of issues and policies − cooperative action is confined to functional cooperation in finance. There is scope for further cooperation in strengthening markets and institutions, with a view to accelerating convergence and stability in the region and deepening shared preferences about policy objectives, including on monetary and exchange rate issues. Although monetary policy in East Asia is generally focussed on controlling inflation, differences remain in economic structure and preferences about policy trade-offs, markets, and institutions.

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Section: Elements Of Cooperation and Steps Aheadmentioning

confidence: 98%

Macroeconomic Linkages and Regional Monetary Cooperation: Steps Ahead*

Brouwer

Ramayandi

Turvey³

2006

Asian Economic Policy Review

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“…Moreover, Ng (2002) concludes that the ASEAN region performs as well as the EU in terms of supply and demand shocks but suffers from poor trade integration and insufficient monetary policy consensus. Rejecting a monetary union at the current stage, Ngo (2013) and Bunyaratavej and Hahn (2003) point to the lack of integration of trade and factor markets, low intensity of intra‐regional trade, and differences in macroeconomic convergence. However, Ramayandi (2005) gives support (but rather in the long run) for a monetary union of five ASEAN countries based on an analysis of different macroeconomic criteria and their convergence.…”

Section: Overview Of the Literaturementioning

confidence: 99%

Monetary union in Southeast Asia: An assessment of the optimum currency area theory*

Hafner

2023

World Economy

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This paper applies optimum currency area (OCA) theory to Southeast Asia to assess the potential for a monetary union in that region. We construct a panel of 10 Southeast Asian countries over the period 1990–2018 and apply the dynamic OLS estimator to quantify the costs and benefits of a potential OCA. A possible monetary union in Southeast Asia is vulnerable to asymmetric shocks, although the degree of specialisation has decreased and the openness index increased. Estimates confirm that both OCA criteria favour an increase in the region's income and FDI inflows and a reduction of its unemployment rate. However, inadequate labour mobility and stagnating intra‐trade shares are major obstacles in this regard, but if addressed they could benefit economic development and GDP per capita in the ASEAN region. We conclude that Southeast Asia is far from being an optimum currency area, but if it were to form a common currency area, the loss of economic sovereignty and its costs would be more than offset by the resulting monetary efficiency gain.

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“…Moreover, this study also addresses the determinants of this convergence consisting of FDI, export, and import. Empirically, some studies have elaborated the convergence analysis of ASEAN economies (Alavi & Ramadam, 2008;Bobowski, 2017;Bunyaratavej & Hahn, 2003;Chien et al, 2015;Gugler & Vanoli, 2017;Ismail, 2008;Lim & McAleer, 2004;Rath, 2019;Yilanci & Korkut Pata, 2020), but none of those studies emphasize how the convergence behaviour from the proportional contribution of factor production captured by technical efficiency 1 . In this regard, this study contributes to the literatures by revealing the convergence behaviour from 12 countries in ASEAN plus three economies as well as determine what factors driving it.…”

Section: Article Infomentioning

confidence: 99%

Mind the Gap: The Efficiency Convergence of ASEAN Plus Three Economies

Yasin

2023

JDE

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This study aims to examine the performance of technical efficiency convergence (Beta and Sigma convergences) of 10 ASEAN economies as well as other three main partners from East Asia, namely China, South Korea, and Japan for the years of 1990-2021, and addresses the determinants of this convergence consisting of foreign direct investment (FDI), export, and import. By using Stochastic Frontier Analysis to estimate technical efficiency as well as panel dynamic of Generalized Methods of Moment (GMM) to test convergence, we found robust findings of convergence moments, both the catching up effect (Beta Convergence) as well as inequality reduction (Sigma Convergence) across the countries. The effect of FDI inflow to the growth of technical efficiency growth is positive. Coupled to this, a higher ratio of export to the GDP affects positively to the efficiency growth by about 14%-26%. In contrast, importing causes diminishing efficiency growth. The effect of FDI is significant in reducing the inequalities of efficiency only in the period of 2006-2021. While export reveals positive significance in affecting efficiency gap, import discourages efficiency gap to enlarge, indicating that import substitution remains unable to be implemented in some countries to obtain efficiency.

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Convergence and Its Implications for a Common Currency in ASEAN

Cited by 10 publications

References 10 publications

Macroeconomic Linkages and Regional Monetary Cooperation: Steps Ahead*

Macroeconomic Linkages and Regional Monetary Cooperation: Steps Ahead*

Monetary union in Southeast Asia: An assessment of the optimum currency area theory*

Mind the Gap: The Efficiency Convergence of ASEAN Plus Three Economies

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