M., Azali and Wong, K. S. Kelly and Lee, C. and Shafinaz, Ahmad Nazar (2007): THE ASEAN-5 FUTURE CURRENCY: MAASTRICHT CRITERIA.
Download (308kB) | Preview
In this recent decade, many of the economists and policymakers attempted to investigate the suitability of the East Asian region to form a currency union and based on the European countries experience as a benchmark. This study aims to investigate the long-run real convergence in GDP per capita growth among Malaysia, Thailand, Singapore, Indonesia, and the Philippines, over 1978 to 2004. The Dickey-Fuller (DF) and Augmented Dickey-Fuller (ADF) unit root tests were conducted at first difference of GDP per capita for each country; the results demonstrated that all countries GDP per capita are stationary at first difference. The results of the Bound Testing Approach (Auto-Regression Distributed Lag (ARDL)) indicated that there is a long run relationship between variables in the Maastricht Criteria. The results showed that interest rate, inflation rate and the debt ratio experience that negative relationship to the GDP per capita. However, the exchange rate and surplus (or deficit) ratio shown the positive related to the GDP per capita. Therefore, the findings showed the ASEAN 5 countries have fulfilled the Maastricht Criteria with consistent to expected sign(s) except for Singapore’ exchange rate and Indonesia’s debt ratio. Hence, those ASEAN 5 countries in this study have potential to form a single currency.
|Item Type:||MPRA Paper|
|Commentary on:||Eprints 122022 not found.|
|Original Title:||THE ASEAN-5 FUTURE CURRENCY: MAASTRICHT CRITERIA|
|Keywords:||Monetary Union (MU), Bound Test (ARDL), Maastricht Criteria, Single Currency|
|Subjects:||E - Macroeconomics and Monetary Economics > E0 - General
F - International Economics > F0 - General
|Depositing User:||M. Azali|
|Date Deposited:||10. Sep 2008 06:07|
|Last Modified:||15. Feb 2013 17:49|
Afxentiou, P.C. and Serletis, A. (2000). “The maastricht criteria: convergence and economic benefits.” International Review of Economics and Business, RISEC 47: 524-540.
Alesina, Alberto, Silvia Ardagna, Roberto Perotti and Fabio Schiantarelli (1999). “Fiscal policy, profits and investment,” National Bureau of Economic Research Working Paper #7207.
Andrea F. (2005). “The debt-growth nexus: an empirical analysis,” Department of Economics-Universita Politecnica delle Marche. Asian Development Bank (ADB). downloadable from http://www.adb.org/.
Bruno, M. and W. Easterly, (1998). “Inflation crises and long-run growth”, Journal of Monetary Economics,vol. 41, pp. 3-26.
Barro, R., (1996). “Inflation and growth”, Federal Reserve Bank of St. Louis Review, vol. 78, pp. 153-169.
Bardsen, G (1989). “Estimation of long-run coefficients in error correction models”. Oxford Bulletin of Economics and Statistics, 48, 253-278.
Campbell, J.Y. and Perron, P. (1991). “Pitfalls and opportunities: what macroeconomists should know about unit roots,” in O.J. Blanchard and S. Fischer (eds), National Bureau of Economic Research Macroeconomics Annual, MIT Press, Cambrige, pp. 144-201.
Choong C. K., Law S. H., Zulkornain Y. and Choo S. S. (2005). “Export-led growth hypothesis in malaysia: a revisit,” The ICFAI Journal of Monetary Economics, Vol. III (4), pp. 26-42.
Chowdhury, Abdur R., (2004), “External debt, growth and the HIPC initiative: is the country choice too narrow?”, chapter 8 in Debt Relief for Poor Countries, ed. By Addison, Hansen and Tarp.
Clements, Benedict, Rina Bhattacharya, and Toan Q. Nguyen, (2004), “External debt, public investment, and growth in low-income countries”, IMF Working Paper No. 03/249.
Dickey, D. A. and Fuller, D.A. (1979). “ Distributions of the estimators for autoregressive time series with a unit root”. Journal of American Statistical Association, 74, 427-431.
Dong Fu et. al. (2003). “Fiscal policy and growth,” Federal Reserve Bank of Dallas Research Department Working Paper #0301.
Elias S. and V. Castro (2004). “How the maastricht rules affected the convergence process in the european union. A panel data analysis.” Faculty of Economics, University of Coimbra. Documento De Trabalho / Discussion Paper (April), No: 24.
Engen, Eric and Jonathan Skinner (1992). “Fiscal policy and economic growth,” National Bureau of Economic Research Working Paper #4223.
Engle, R. F. and Granger, C W. J. (1987). “Cointegration and error correlation representation: estimation and testing”. Econometrica, 55, 251-276.
Fabella R. (2002). “Monetary cooperation in east Asia: a survey.” Economics and Research Department (ERD) Working Paper series No. 13.
Fischer, S., (1993). “The role of macroeconomic factors in economic growth”, Journal of Monetary Economics, vol. 32, pp. 485-512.
Hansen, Henrik, (2004), “The impact of external aid and external debt on growth and investment”. chapter 7 in Debt Relief for Poor Countries, ed. by Addison, Hansen and Tarp.
Hossain, A. and A. Chowdhury, (1996). Monetary and Financial Policies in Developing Countries, London: Routledge.
International Monetary Fund (IMF). International Financial Statistics CD-ROM 2006.
Jin, N.K, (2002). “Financial and monetary cooperation in east asia: issues and options”, Institute of Southeast Asian Studies.
Johansen, S. (1991). “Estimation and hypothesis testing of cointegrating vectors in gaussian vector autogressive models”. Econometrica, 59, 1551-1580.
Johansen, S. and K. Juselius, (1990). “Maximum likelihood estimation and inference on cointegration – with application to the demand for money.” Oxford Bulletin of Economics and Statistics 52(2): 169-210.
M. Azali and Shafinaz Ahmad Nazar, “An econometric appraisal of single currency model on asian countries”. Presented at FEP Seminar “Glocalization Issues and Challenges in Economics and Business”, Dec 13-15, 2006.
Mallik, G. and A. Chowdhury, (2001). “Inflation and economic growth: evidence from four south asian countries”, Asia-Pacific Development Journal, 1, June 2001, vol (8), pp. 123-135.
Newey, W. and West, K. (1987), “A simple positive semi-definite, heteroskedasticity and autocorrelation consistent covariance matrix,” Econometrica, vol. 51, pp. 703-708.
Ng, T. H. (2002). “Should the southeast asian countries form a currency union?” The Development Economies XL-2: 113-134. Organization for Economic Co-operation and Development Statistics. Downloadable from http://www.oecdwash.org/DATA/online.htm
Pattillo, Catherine, Helene Poirson, and Luca Ricci, (2002), “External debt and growth”, IMF Working Paper, No. 02/69.
Paul, S., C. Kearney and K. Chowdhury, (1997). “Inflation and economic growth: a multi country empirical analysis”, Applied Economics, vol. 29, pp. 1387-1301.
Pesaran, M.H. and Y. Shin (1995). “An autoregressive distributed lag modeling approach to cointegration analysis”, DAE Working Paper No. 9514, Department of Applied Economics, University of Cambridge.
Pesaran, M.H., Shin, Y. and Smith, R (2001). “Bound testing approaches to the analysis of level relationship”. Journal of Applied Econometrics, 16, 289-326.
Roberto, F. D. O. (2004). “A single currency for asia: is it time?” 37th ADB Annual Meeting, Korea.
S. E. Said and D. A. Dickey (1984): “Testing for unit roots in autoregressive-moving average models of unknown order”. Biometrika 71, 599–607.
Sharma, S. C. and Chua, S. Y. (2000). “ASEAN: economic integration and interregional trade.” Applied Economic Letters 7: 165-169.
Tang, T. C (2001). “Bank lending and inflation in malaysia: assessment from unrestricted error correction models”. Asian Economic Journal, 15, pp. 275-289.
Tang, T. C (2002). “Demand for M3 and expenditure components in malaysia: assessment from bounds testing approach”. Applied Economic Letters, 9, pp. 721- 725.
Thornton, J. and Goglio, A. (2002). “Regional bias and intra-regional trade in southeast asia.” Applied Economics Letters 9: 205-208.
Tun Wai, U., (1959). “The relation between inflation and economic development: a statistical inductive study”, IMF Staff Papers, vol. 7, pp. 302-317.
World Bank. World Development Indicators, downloadable: http://web.worldbank.org/.
Zhang Ji Kang and Lan Yin (2005), “Is east asia suitable for a monetary union? experience from EU and evidence from china, japan and south korea.” EU-NESCA papers November 2005. downloadable:http://www.ieem.org.mo/nesca/papers.html.
- M., Azali and Wong, K. S. Kelly and Lee, C. and Shafinaz, Ahmad Nazar THE ASEAN-5 FUTURE CURRENCY: MAASTRICHT CRITERIA. (deposited 10. Sep 2008 06:07) [Currently Displayed]