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Author: Shu-ki Tsang
Publisher:
ISBN:
Category :
Languages : en
Pages : 27
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Book Description
After the political unification of Hong Kong with China, Hong Kong is supposed to function as a separate economic entity under the framework of one country, two systems. However, the increasingly close ties between the two economies, particularly in recent years, have raised the possibility of full economic integration despite political constraints, and even of monetary union as the Chinese currency progresses towards full convertibility. This paper employs the theory of optimum currency area (OCA) and adopts two techniques over a range of economic variables to test whether Mainland China and Hong Kong constitute an OCA. The historical results presented in this paper are very sceptical of a positive answer. Empirical findings based on disaggregated data show some signs of nominal and real convergence only between Hong Kong and parts of Eastern China, driven by trade. This seems to be consistent with the actual trajectory of economic integration. However, all other results, even those based on higher frequency price data, point to a lack of evidence that Hong Kong and Mainland China as a whole as yet constitute an OCA.
Author: Shu-ki Tsang
Publisher:
ISBN:
Category :
Languages : en
Pages : 27
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Book Description
After the political unification of Hong Kong with China, Hong Kong is supposed to function as a separate economic entity under the framework of one country, two systems. However, the increasingly close ties between the two economies, particularly in recent years, have raised the possibility of full economic integration despite political constraints, and even of monetary union as the Chinese currency progresses towards full convertibility. This paper employs the theory of optimum currency area (OCA) and adopts two techniques over a range of economic variables to test whether Mainland China and Hong Kong constitute an OCA. The historical results presented in this paper are very sceptical of a positive answer. Empirical findings based on disaggregated data show some signs of nominal and real convergence only between Hong Kong and parts of Eastern China, driven by trade. This seems to be consistent with the actual trajectory of economic integration. However, all other results, even those based on higher frequency price data, point to a lack of evidence that Hong Kong and Mainland China as a whole as yet constitute an OCA.
Author: Hong Liang
Publisher:
ISBN:
Category : Econometric models
Languages : en
Pages : 17
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Book Description
Explores the behavior of the long-run real exchange rate (RER) fo Hong Kong SAR and China by testing the generalized-purchasing power parity hypothesis.
Author: Ms.Hong Liang
Publisher: International Monetary Fund
ISBN: 1451850182
Category : Business & Economics
Languages : en
Pages : 18
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Book Description
The paper explores the behavior of the long-run real exchange rate (RER) of Hong Kong SAR and China by testing the generalized-purchasing power parity hypothesis (G-PPP). The hypothesis argues that if the fundamental variables determining RERs are sufficiently integrated, as in a currency area, the RERs should share common trends. The findings of this study suggest (1) at present, Hong Kong SAR and China do not satisfy the conditions necessary for forming an optimal currency area by themselves; (2) when Japan and the United States are added to the group, common trends can be found; and (3) the long-run elasticity between the RERs of Hong Kong SAR and China is negative.
Author: Sau San Chan
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Hong Kong is a unique case in the world history of exchange systems. As a territory under British administration for more than 150 years, it has maintained a floating exchange rate relationship with its sovereignty power in a separate currency area for more than a century. This exchange arrangement once existed with a peculiar institutional setting that the government had no control over the monetary base. In the post-1997 era, the survival of this "one country, two currencies" model depends on whether the authorities will continue to allow the HK dollar to float against the Renminbi. Based on the theory of optimum currency areas, this paper, with the ultimate objective to identify the optimal choice of exchange rate regime for HK, explores the economic rationale behind these interesting phenomena. The two inter-related issues--the choice of fixed versus floating exchange rate regimes and the optimal target of link currency--are addressed. It is argued that the structural characteristics and the development of monetary institutions have been the crucial determinants of the optimal exchange system for the sub-national economy. Our findings provide new interpretations regarding the monetary crisis in October 1983 and the monetary reforms since July 1988 and delineate policy implications for the exchange arrangements before and after 30 June 1997. It is suggested that HK should stay in the U.S. currency area, which has a floating exchange rate relationship with the currency area of the Territory's sovereignty power. The "one country, two currencies" model should be intact as long as the structural characteristics of HK remain unchanged. This paper also adds value to the empirical studies of optimum currency areas, which have been dominated traditionally by the verification of the diversified choices between fixed and floating exchange rate regimes and contemporarily by the justification for the EMU. It represents the first effort to deal with a model of many currencies for one country since R. Mundell introduced the idea that the domain of optimum currency areas should be defined by structural characteristics rather than national boundary in 1961.
Author: Suthiphand Chirathivat
Publisher: Edward Elgar Publishing
ISBN: 9781845423384
Category : Business & Economics
Languages : en
Pages : 272
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Book Description
Leading scholars from East Asia, Europe and the US contribute new insights to the key questions facing the organization and future of the monetary system in East Asia. Central questions discussed and analysed in the book include, amongst others: should the region move towards monetary union? Should countries peg their exchange rates to the US dollar? Is complete dollarization an option for East Asia? The authors argue that, having realized price stability over the last twenty years, in contrast to Latin America and Africa, the next logical step would be the gradual formation of various currency blocs within the region. This comprehensive discussion of the fundamental issues at stake will ensure the book's appeal to academics and researchers of Asian studies and financial economics. Financial experts working in this area and policymakers will also find much of interest to them within this book.
Author: Chun Kwok Lei
Publisher: Routledge
ISBN: 1134077181
Category : Business & Economics
Languages : en
Pages : 263
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Book Description
Although China's economy has grown rapidly in recent decades, there are still very large differences between the economies of mainland China and those of Hong Kong, Macau and Taiwan. This book considers how far economic convergence between these four territories has occurred, and the prospects for increased convergence in the future.
Author: Yin-Wong Cheung
Publisher: Hong Kong University Press
ISBN: 9789622098220
Category : Business & Economics
Languages : en
Pages : 184
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Book Description
The tremendous success of China's program of economic reform and the rapid integration of China into the global economy have prompted this study on the economic and financial integration between mainland China, Hong Kong, and Taiwan – a grouping sometimes referred to as Greater China. While there has been a plethora of analyses of China's economic interactions with other economies, this book fills the need for a thorough investigation of regional financial and real interactions – corresponding to the many exhaustive studies of such interactions between developed countries and between East Asian countries. Since real and financial integration has substantial implications for the efficiency of resource allocation and the efficacy of macroeconomics policy, Cheung, Chinn and Fujii offer clear analysis of the current state of economic integration of Greater China, thereby helping to gauge the potential role of China in the global economy. Prospects of a currency union in Greater China, an extreme form of integration, are also evaluated with respect to benefits and costs to the three parties. In addition, the authors provide complementary discussions regarding the degree of integration between China and several Pacific Rim economies, including those of Japan, Korea, Singapore, and the United States. Cheung, Chinn and Fujii provide an up-to-date assessment of mainland China's economic development and its integration with its neighboring economies, especially Hong Kong and Taiwan. This grouping is also known as Greater China. There are a number of approaches to assessing economic integration, and the authors present some standard measures – including trade flows, output movements, saving and investment correlations, and consumption comovements. They emphasize the measures based on some key parity conditions in international finance – real interest parity, uncovered interest parity, and relative purchasing power parity. While there is no perfect empirical measure of economic integration, the theoretical relationships between integration and these three parity conditions are well founded in economics. Moreover, the three parity conditions constitute a unified framework that can be used to assess the degree of real and financial integration, and thus offer a convenient way to investigate the interaction between these two types of integration. In addition, the authors evaluate the prospect of a currency union in Greater China, the most extreme form of integration. Prospects of China's continued integration with the world economy, and the implications of policies in Beijing and other Pacific Rim capitals are also discussed.
Author: Yue Ma
Publisher:
ISBN:
Category : Foreign exchange rates
Languages : en
Pages : 33
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Book Description
Author: Tony Cavoli
Publisher: Hong Kong University Press
ISBN: 9622090532
Category : Business & Economics
Languages : en
Pages : 249
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Book Description
With the rise of China, India and the re-emergence of East Asia from the financial crisis of 1997–98, monetary issues in Asia have acquired great significance as the region holds the largest reserves in the world and consequently plays a major role in the global macro-economy. In addition, there are also a great variety of monetary policy regimes at play in the region – reflecting each country's needs and policy preferences. This volume explores monetary, exchange rate and macroeconomic policies in Asia. A particular question that is analysed is Asia's experience since the crisis with the use of monetary policy to manage the resurgence in capital inflows. It also examines the theoretical and policy issues associated with international capital flows, the increasing degree of integration of financial markets and exchange rates for emerging Asian economies. The book is unique in focussing on China, India and Southeast Asia, rather than just having a sub-regional or country-specific focus. Rigorous empirical analysis is applied to important practical policy issues. The book also provides accessible overviews of recent research relevant to the questions that are explored and is written throughout in a manner that is accessible to policy makers, students and business/financial journalists.
Author: Jianjun Wei
Publisher:
ISBN:
Category : Monetary policy
Languages : en
Pages : 342
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Book Description
