East Asia and Optimum Currency Area: Shocking Aspects Before and After Crises (1997)

Abstract

This report examines the feasibility of Optimum Currency Area for East Asian countries with reference to economic conditions before and after financial crises 1997. Theoretical perspective of the OCA theory is given to find the logics of Currency Area in this region. The empirical part of the report is supported by econometric findings from data using Output and Inflation. A vector Auto regression approach using the methodology defined by Blanchard and Quah has been applied. The report provides statistical reasoning for the existence of synchronized economic behavior for two groups of countries in the region. The report argues that these two groups can form a form monetary union until certain integration has been achieved to gain full monetary unification in the region.