A Study on the Feasibility of Monetary Cooperation among Mainland, Taiwan, Hong Kong and Macao ——Based on the OCA Index M
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| Title | A Study on the Feasibility of Monetary Cooperation among Mainland, Taiwan, Hong Kong and Macao ——Based on the OCA Index M
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| Author | Li Xuelian and Wang Jinyang |
| Organization | Southwest University of Finance and Economics |
| Email | xlli@swufe.edu.cn; jinyangwang86@gmail.com |
| Key Words | Mainland, Taiwan, Hong Kong and Macao; panel OCA index model; regional monetary cooperation |
| Abstract | This paper conducts empirical analysis on the sample data of mainland China, Hong Kong, Macao and Taiwan from 1989-2009, by the virtue of panel data model according to the optimal currency area theory (OCA theory) and optimal currency area index (OCA index) method. We find that the major factors affecting monetary cooperation between the Four Regions across Taiwan Straits (FRTS) are the differences in economic structure, inflation rate, interest rate and money supply disturbance. To the best of our knowledge, this is the first paper that finds the significant influence of the difference in money supply disturbance on regional monetary cooperation, in the empirical study on the OCA. Based on the results, in this paper, we introduce the OCA index model and calculate the OCA indexes of the FRTS from 1991 to 2008. Based on a thorough evaluation of the comprehensive costs of monetary cooperation, this paper shows that the regional monetary cooperation among Mainland, Taiwan, Hong Kong and Macao is feasible. In the end, this paper discusses the prospect of the monetary cooperation and offers some advices to promote monetary cooperation on policy. |
| Serial Number | WP647 |
| Time | 2014-08-08 |
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