There has been recently increasing interest in the establishment of a common currency area in East Asia in the aftermath of the East Asian financial crisis. In this paper, we examine the desirability and feasibility of forming a currency area in the region by checking the symmetry of shocks as an important criterion of the Theory of Optimum Currency Area. We employ a Dynamic Factor Model to dec...

Available online 23 July 2010 We investigate the effectiveness of capital controls in insulating economies from currency crises, focusing in particular on both direct and indirect effects of capital controls and how these relationships may have changed over time in response to global financial liberalization and the greater mobility of international capital. We predict the likelihood of currenc...

Stress in financial markets influences economic agents’ behavior by creating uncertainty and changing the expectations. Critical financial stress can lead to financial crisis. Financial crises are among the events always present in the world economy. Iran is not an exception. This paper aims to study the impact of financial stresses on Iran’s per capita GDP. By using ARDL (Auto Regressive Distr...

Recently, a new resolve for both increased economic integration and monetary and exchange rate cooperation has started to emerge in ASEAN, especially since the 19971998 Asian financial crisis. According to the optimum currency area theory, the degree of trade integration is one most important criterion for joining a currency union. The large increase in intra-ASEAN trade in recent years natural...

The current situation in the eurozone raises a number of topics for discussion and to help in finding an answer to the question of whether a common currency is a more suitable means of coping with the impact of the financial crisis or whether national currencies are better suited to this. The economic situation in the EU is now considerably volatile and, due to problems with the fulfilment of t...

This paper shows how expectations-driven contagion of currency crises can arise even if the currency market has a unique equilibrium when viewed in isolation. The model of Morris and Shin (1998) is extended to allow speculators to trade in a second currency market. If speculators believe that a devaluation of this other currency will make a domestic devaluation more likely, they will engage in ...

Department of Economics, University of Isfahan, Iran   Ahmad Googerdchian   Assistant Professor, Department of Economics, University of Isfahan, Iran     Abstract   Implementing a currency :::union::: may lead members to face financial crisis if their financial markets are not ready to adopt themselves to a new situation. There are still problems like ownership concentration and self-gover...