Starting from the Optimum Currency Area (OCA), this paper utilize the Vector Error Correction Model (VECM) to identify the dynamic short term and the long term co-movement between the ASEAN 4 currencies, including their existing fundamental mechanism. There are at least 3 important findings, (i) the co-movement between the ASEAN 4 currencies is not proved empirically, (ii) the theory of OCA does not robust in explaining the co-movement pattern in ASEAN, and (iii) the existance of OCA is a global phenomena, indicated from the significance of Yen currency on the ASEAN 4. These findings led to a conclusion of this paper that the ongoing economic integration as well as the financial one in ASEAN are not enough to form a unified monetary arrangement nor a common currency in this region.JEL Classification : F02, F36, F33, C32Keywords : Co-Movement, Optimum Currency Area, Vector Error Correction Model.
Ariefianto, Moch. Doddy and Warjiyo, Perry
"CO-MOVEMENT 4 PERIOD ASEAN CURRENCY 1997-2005 A THEORY APPLICATION NAMELY OPTIMAL CURRENCY AREA USING VECTOR ERROR CORRECTION MODEL,"
Bulletin of Monetary Economics and Banking: Vol. 12:
4, Article 2.
Available at: https://bulletin.bmeb-bi.org/bmeb/vol12/iss4/2