Chan, Tze-Haw (2012): Assessing the international parity conditions and transmission mechanism for Malaysia-China.
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We construct a structural system that jointly examines Purchasing Power and Interest Parity conditions for Malaysia-China during 1996Q1-2010Q4. Structural VARX, VECMX, over-identifying restrictions, bootstrapping and persistent profiles are utilized in the analyses. We find support for interaction between the goods and capital markets of Malaysia-China, when Asia crisis and subprime crisis are taken into accounts. The faster pace of adjustment towards price instead of interest equilibrium implies the non-appearance of sequencing problem in economic integration. Nevertheless, it is of concern that maintaining a rigid foreign exchange with major trading partner could be costly with potentially contagious price instability and financial risk.
|Item Type:||MPRA Paper|
|Original Title:||Assessing the international parity conditions and transmission mechanism for Malaysia-China|
|Keywords:||International Parity Conditions, Economic Integration, Transmission Mechanism, VARX, VECMX|
|Subjects:||F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F42 - International Policy Coordination and Transmission
C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation
F - International Economics > F3 - International Finance > F36 - Financial Aspects of Economic Integration
|Depositing User:||Tze-Haw Chan|
|Date Deposited:||21 May 2012 17:34|
|Last Modified:||30 May 2016 01:51|
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