A simulation study of an ASEAN monetary union

J.C. Engwerda, O. Boldea, T. Michalak, J.E.J. Plasmans, S. Salmah

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper analyzes some 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.
Original languageEnglish
Pages (from-to)1870-1890
JournalEconomic Modelling
Volume29
Issue number5
DOIs
Publication statusPublished - 2012

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Simulation study
Monetary union
Fiscal policy
Authority
Dynamic general equilibrium model
Linear quadratic differential games
Economic shocks
Status quo
Burma
Open economy

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Engwerda, J. C., Boldea, O., Michalak, T., Plasmans, J. E. J., & Salmah, S. (2012). A simulation study of an ASEAN monetary union. Economic Modelling, 29(5), 1870-1890. https://doi.org/10.1016/j.econmod.2012.05.032
Engwerda, J.C. ; Boldea, O. ; Michalak, T. ; Plasmans, J.E.J. ; Salmah, S. / A simulation study of an ASEAN monetary union. In: Economic Modelling. 2012 ; Vol. 29, No. 5. pp. 1870-1890.
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Engwerda, JC, Boldea, O, Michalak, T, Plasmans, JEJ & Salmah, S 2012, 'A simulation study of an ASEAN monetary union', Economic Modelling, vol. 29, no. 5, pp. 1870-1890. https://doi.org/10.1016/j.econmod.2012.05.032

A simulation study of an ASEAN monetary union. / Engwerda, J.C.; Boldea, O.; Michalak, T.; Plasmans, J.E.J.; Salmah, S.

In: Economic Modelling, Vol. 29, No. 5, 2012, p. 1870-1890.

Research output: Contribution to journalArticleScientificpeer-review

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