A Simulation Study of an ASEAN Monetary Union

CentER Discussion Paper Series No. 2011-098, revision of CentER Discussion Paper Series No. 2010-100

46 Pages Posted: 4 Dec 2010 Last revised: 2 Sep 2011

See all articles by Otilia Boldea

Otilia Boldea

Tilburg University, CentER

Jacob C. Engwerda

retiree

Tomasz Michalak

affiliation not provided to SSRN

Joseph Plasmans

University of Antwerp - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Tilburg University

Salmah

Universitas Gadjah Mada (UGM)

Date Written: August 23, 2011

Abstract

This paper studies the pros and cons of a monetary union for the ASEAN1 countries, excluding Myanmar. We estimate a stylized open-economy dynamic general equilibrium model for the ASEAN countries. Using the framework of linear quadratic differential games, we contrast the potential gains or losses for these countries due to economic shocks, in case they maintain their status-quo, they coordinate their monetary and/or fiscal policies, or form a monetary union. Assuming for all players open-loop information, we conclude that there are substantial gains from cooperation of monetary authorities. We also find that whether a monetary union improves upon monetary cooperation depends on the type of shocks and the extent of fiscal policy cooperation. Results are based both on a theoretical study of the structure of the estimated model and a simulation study.

Keywords: ASEAN economic integration, monetary union, linear quadratic differential games, open-loop information structure

JEL Classification: C61, C71, C72, C73, E17, E52, E61, F15, F42, F47

Suggested Citation

Boldea, Otilia and Engwerda, Jacob C. and Michalak, Tomasz and Plasmans, Joseph E. J. and Salmah, A Simulation Study of an ASEAN Monetary Union (August 23, 2011). CentER Discussion Paper Series No. 2011-098, revision of CentER Discussion Paper Series No. 2010-100, Available at SSRN: https://ssrn.com/abstract=1718988 or http://dx.doi.org/10.2139/ssrn.1718988

Otilia Boldea

Tilburg University, CentER ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://www.tilburguniversity.edu/webwijs/show/?uid=o.boldea

Jacob C. Engwerda (Contact Author)

retiree ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2174 (Phone)
+31 13 466 3280 (Fax)

Tomasz Michalak

affiliation not provided to SSRN ( email )

Joseph E. J. Plasmans

University of Antwerp - Department of Economics ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Tilburg University

Postbus 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Salmah

Universitas Gadjah Mada (UGM) ( email )

Bulaksumur, Yogyakarta
Yogyakarta, Special Province of Yogyakarta
Indonesia

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
163
Abstract Views
1,060
Rank
329,180
PlumX Metrics