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Optimum currency area criteria and volatility in ASEAN


Masron, Tajul Ariffin and Yusop, Zulkornain (2006) Optimum currency area criteria and volatility in ASEAN. Asian Academy of Management Journal of Accounting and Finance, 2 (2). pp. 1-17. ISSN 1823-4992; ESSN: 2180-4192


The goal of regional integration is to promote greater macroeconomic coordination, and reduce the degree of macroeconomic volatility, in particular exchange rate fluctuations. This paper investigates how well optimum currency area (OCA) variables will work in the context of the ASEAN region when the Singapore Dollar, given its relative stability, is used as an anchor currency. The results indicate that OCA variables play an important role in explaining bilateral exchange rate volatility. In addition, exchange rate volatility exerts a negative impact on bilateral trade and gross domestic product (GDP). It is also a source of divergence among ASEAN members.

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Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
Publisher: Asian Academy of Management (AAM) and Penerbit Universiti Sains Malaysia
Keywords: Optimum currency area; Bilateral trade; Exchange rate volatility; Asymmetric shock; Size
Depositing User: Nabilah Mustapa
Date Deposited: 31 Jul 2017 09:17
Last Modified: 31 Jul 2017 09:17
URI: http://psasir.upm.edu.my/id/eprint/56412
Statistic Details: View Download Statistic

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