A Simulation Study of an ASEAN Monetary Union (Replaced by CentER DP 2011-098)

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

Research output: Working paperDiscussion paperOther research output

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.
Original languageEnglish
Place of PublicationTilburg
PublisherEconometrics
Number of pages42
Volume2010-100
Publication statusPublished - 2010

Publication series

NameCentER Discussion Paper
Volume2010-100

Fingerprint

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

Keywords

  • ASEAN economic integration
  • monetary union
  • linear quadratic differential games
  • open-loop information structure

Cite this

Boldea, O., Engwerda, J. C., Michalak, T., Plasmans, J. E. J., & Salmah, Y. (2010). A Simulation Study of an ASEAN Monetary Union (Replaced by CentER DP 2011-098). (CentER Discussion Paper; Vol. 2010-100). Tilburg: Econometrics.
Boldea, O. ; Engwerda, J.C. ; Michalak, T. ; Plasmans, J.E.J. ; Salmah, Y. / A Simulation Study of an ASEAN Monetary Union (Replaced by CentER DP 2011-098). Tilburg : Econometrics, 2010. (CentER Discussion Paper).
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Boldea, O, Engwerda, JC, Michalak, T, Plasmans, JEJ & Salmah, Y 2010 'A Simulation Study of an ASEAN Monetary Union (Replaced by CentER DP 2011-098)' CentER Discussion Paper, vol. 2010-100, Econometrics, Tilburg.

A Simulation Study of an ASEAN Monetary Union (Replaced by CentER DP 2011-098). / Boldea, O.; Engwerda, J.C.; Michalak, T.; Plasmans, J.E.J.; Salmah, Y.

Tilburg : Econometrics, 2010. (CentER Discussion Paper; Vol. 2010-100).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

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N1 - Pagination: 42

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N2 - 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.

AB - 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.

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KW - linear quadratic differential games

KW - open-loop information structure

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BT - A Simulation Study of an ASEAN Monetary Union (Replaced by CentER DP 2011-098)

PB - Econometrics

CY - Tilburg

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Boldea O, Engwerda JC, Michalak T, Plasmans JEJ, Salmah Y. A Simulation Study of an ASEAN Monetary Union (Replaced by CentER DP 2011-098). Tilburg: Econometrics. 2010. (CentER Discussion Paper).