| This dissertation studies the appropriateness and likelihood of adopting the Optimum Currency Area (OCA) in the Asian-Pacific Rim, based on the analysis of conventional OCA criteria, intra-Asian trade and business cycles, and the degree of Asian regional monetary interdependence.; The structure of the entire research is organized as follows. Chapter One provides an introduction, literature review, and outline and research objectives.; Chapter Two first examines the OCA criteria: "international factor mobility" and "international openness", revealing that the levels of intra-Asian factor (i.e. capital and labor) movement and trade openness are less substantial, as compared to those of NAFTA and EMU. In addition, from broad range of statistics, the Japanese yen is less favorable held as the international transaction/official currency than the U.S. dollar by most Asian economies. It implies that the use of yen as an anchor currency in any future Asian economic union is farfetched and somewhat unlikely.; The chapter then applies the vector autoregression (VAR) framework to investigate the simultaneity of intra-Asian economic shocks (i.e. the third OCA criterion). The results of forecast error variance decomposition suggest that economic shocks across the Asian-Pacific region are not synchronized, which indicates the adoption of a regional OCA is currently inappropriate.; Chapter Three investigates the co-movement of intra-Asian business cycles. Based on bilateral trade statistics and using three de-trending techniques, the negative trade effects on macroeconomic activities indicate that tighter intra-Asian trade will probably lead to more idiosyncratic business cycles and, hence, lower correlations of economic activity. Given this result, it is believed that the creation of an Asian-Pacific monetary union may be unsuitable and is not recommended.; Chapter Four analyzes the intra-Asian interdependence of the monetary policies. The block exogeneity tests and innovation accounting mechanisms suggest that the degree of cross-country monetary linkages depends on the level of countries' advancement. More specifically, monetary connections among industrial nations tend to be strong and complex, whereas monetary policies in the newly industrialized or developing economies are comparably autonomous. In general, the intra-Asian cross-country monetary interplay appears to be non-cooperative, implying the adoption of the Asian-Pacific OCA is not recommended.; Finally, Chapter Five concludes this dissertation and offers policy implications. |
