In this paper we investigate the feasibility of a common currency peg in East Asia from the perspective of Western European countries. We find that domestic outputs of East Asian countries are strongly influenced by country-specific shocks while regional shocks are far more important in European countries that have joined the Economic and Monetary Union. The results are robust to various changes in specifications of the model. They suggest that East Asian countries are structurally different from each other and thus more likely to be subject to asymmetric shocks. Based on optimum currency area grounds, a common currency peg in East Asia would be more costly and difficult to sustain.JEL classification: F33, F41

No abstract

The International Monetary System Since World War I1 THE INTERNATIONAL MONETARY SYSTEM, edited by Peter Kenen. Boulder CO: Westview Press. 1993. $65 (hardcover) 355 pp. Editor's Note: Numerous questions of regional development hinge on the stability and eflciency of monetary institutions, international as well as domestic. l h e volume reviewed here by Professor Kim illustrates the growth since World War I1 of understanding of monetary stability and efficiency and the many aspects of,flexibility and adjustment that these entail. The book is an inquiry on "What is money, and whose responsibility is it?" in reference to interdependent open economies. This episode in the history of economic thought shows the analytical path from basic questions to the choice of an actual monetary system. . (I 988), 933-948.