Asset Pricing Implications of Monetary Policy Coordination

This paper considers the form of monetary policy coordination and regional exchange rate arrangement that would best support economic and financial integration in East Asia. In view of the region's economic diversity, we propose a graduated program of informal policy cooperation from weak forms of cooperation to more intensive modes of cooperation such as the adoption of common monetary policy objectives. An array of informal monetary arrangements rooted to the degree of institutional development can improve the effectiveness of both sovereign and regional institutions, and promote integration in East Asia. Drawing upon the European experience with the Exchange Rate Mechanism (ERM), we conclude that East Asia should first embark on other forms of integration to aid in the development of a high degree of real and nominal convergence amongst the regional countries. Only then would an ERM-type system that employs a regional monetary unit become more sustainable and less susceptible to speculative currency attacks in the region.

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Gains from International Monetary Policy Coordination: Does it Pay to Be Different?

SSRN Electronic Journal ◽

10.2139/ssrn.775425 ◽

2005 ◽

Author(s):

Zheng Liu ◽

Paraskevi (Evi) Pappa

Keyword(s):

Monetary Policy ◽

Policy Coordination ◽

International Monetary Policy ◽

Monetary Policy Coordination

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INTENSITAS PERDAGANGAN DAN KESELARASAN SIKLUS BISNIS DI ASEAN-4 DAN UNI EROPA *

Jurnal Ekonomi Pembangunan Kajian Masalah Ekonomi dan Pembangunan ◽

10.23917/jep.v12i2.191 ◽

2011 ◽

Vol 12 (2) ◽

pp. 163

Author(s):

Etty Puji Lestari

Keyword(s):

Monetary Policy ◽

Business Cycles ◽

Business Cycle ◽

Currency Union ◽

Policy Coordination ◽

Trade Intensity ◽

Regression Methods ◽

Trading Partners ◽

Monetary Policy Coordination ◽

The Business Cycle

The main objective of this research is to empirically analyze how the business cycle of ASEAN-4 (namely Indonesia, Malaysia, Thailand, and Philippines) economies are influenced by increased trade with European Union especially Netherland and Germany. Increased trade can lead business cycles across trading partners to be patterned in either direction, towards convergence or divergence. We used regression and vectorautoregression (VAR) methods for this research. Regression methods is based panel data whereas VAR is based on the time series analysis. There are four variables, which are business cycle, trade intensity, fiscal policy coordination and monetary policy coordination. This research conclude that trade intensity and monetary policy coordination are the major channel though which the business cycles of ASEAN-4 economies become synchronized. This has important implications for the formation of a currency union.

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