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THE SUITABILITY OF A GREATER CHINA CURRENCY UNION
Author(s) -
Cheung YinWong,
Yuen Jude
Publication year - 2005
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2005.00262.x
Subject(s) - economics , china , currency , currency union , shock (circulatory) , international economics , common currency , monetary economics , investment (military) , inflation (cosmology) , geography , medicine , physics , archaeology , politics , theoretical physics , political science , law
. The study assesses the level of integration among the three Greater China economies (China, Hong Kong and Taiwan) and examines the suitability of a Greater China currency union. The three economies already have extensive trade and investment linkages. Our analyses show that they share common long‐run and short‐run cyclical variations. We also estimate the output costs of relinquishing policy autonomy to form a currency union. The estimated output losses, which depend on, e.g., the method used to generate shock estimates, seem to be moderate and are likely to be less than the efficient gains derived from a currency union.