{"title":"CAN A COMMON CURRENCY INDUCE INTRA-REGIONAL TRADE? THE SOUTHEAST ASIAN PERSPECTIVE","authors":"Shahriar Kabir, Ruhul Salim","doi":"10.1111/RURD.12054","DOIUrl":null,"url":null,"abstract":"Recent literature strongly suggests that a common currency could be a potential long-term currency arrangement for Association of Southeast Asian Nations (ASEAN). However, a high level of macroeconomic heterogeneity among these countries raises questions about the viability of managing a common monetary policy in the long run. In response to such currency management policy debate, this study analyzes the intra-regional trade induction capability of a common currency for the ASEAN region. Using a gravity model of trade and an extended event study approach, the study finds that a common currency would induce intra-ASEAN trade by 11–14 cents against every dollar of ASEAN gross domestic product. However, if the cost of managing regional macroeconomic harmonization is substantially high, a currency union for the ASEAN economy not be cost effective.","PeriodicalId":39676,"journal":{"name":"Review of Urban and Regional Development Studies","volume":"28 1","pages":"218-234"},"PeriodicalIF":0.0000,"publicationDate":"2016-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1111/RURD.12054","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Review of Urban and Regional Development Studies","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1111/RURD.12054","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"Social Sciences","Score":null,"Total":0}
引用次数: 1
Abstract
Recent literature strongly suggests that a common currency could be a potential long-term currency arrangement for Association of Southeast Asian Nations (ASEAN). However, a high level of macroeconomic heterogeneity among these countries raises questions about the viability of managing a common monetary policy in the long run. In response to such currency management policy debate, this study analyzes the intra-regional trade induction capability of a common currency for the ASEAN region. Using a gravity model of trade and an extended event study approach, the study finds that a common currency would induce intra-ASEAN trade by 11–14 cents against every dollar of ASEAN gross domestic product. However, if the cost of managing regional macroeconomic harmonization is substantially high, a currency union for the ASEAN economy not be cost effective.
期刊介绍:
Review of Urban & Regional Development Studies (RURDS) focuses on issues of immediate practical interest to those involved in policy formation and implementation. Articles contain rigorous empirical analysis, with many emphasizing policy relevance and the operational aspects of the academic disciplines, while others focus on theoretical and methodological issues. Interdisciplinary and international in perspective, RURDS has a wide appeal: in addition to scholars, readership includes planners, engineers and managers in government, business and development agencies worldwide.