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Business Cycles and the Synchronisation Process: A Bounds Testing Approach

To justify the business cycle synchronization (BCS) process among ASEAN-5 (Indonesia, Malaysia, Philippines, Singapore and Thailand), Japan and the United States, the Autoregressive Distributed Log bounds test and the UECM (Unrestricted Error Correction Model) representation advanced in Pesaran et a...

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Main Authors: Chan, Tze Haw, Lau, Evan Poh Hock
Format: Article
Language:English
Published: INTI Publishing House Sdn Bhd 2005
Subjects:
HC Economic History and Conditions
HD28 Management. Industrial Management
Online Access:http://eprints.intimal.edu.my/299/1/2005_9.pdf
http://eprints.intimal.edu.my/299/
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spelling my-inti-eprints.2992016-05-17T02:50:13Z http://eprints.intimal.edu.my/299/ Business Cycles and the Synchronisation Process: A Bounds Testing Approach Chan, Tze Haw Lau, Evan Poh Hock HC Economic History and Conditions HD28 Management. Industrial Management To justify the business cycle synchronization (BCS) process among ASEAN-5 (Indonesia, Malaysia, Philippines, Singapore and Thailand), Japan and the United States, the Autoregressive Distributed Log bounds test and the UECM (Unrestricted Error Correction Model) representation advanced in Pesaran et al. (2001) is deployed. Evidently, ASEAN-5 has achieved some important degree of business cycle co fluctuations, attributed to improved intra trading and cross-boarder investments. Nonetheless, the idiosyncratic and common shocks in ASEAN economies are more identical to the Japanese experience rather than the US experience. Comparable patterns of economic development and liberalisation process have created countries (ASEAN-Japan) with similar economic structures, implying that further economic cooperation and currency arrangements in the region are bright. In addition, our findings demonstrate that the bilateral exchange rate stability may not contribute to the business cycle convergence, as in the ASEAN-US case while bilateral exchange rate dispersion has not jeopardised the ASEAN-Japan BCS process. Also, price divergences among the ASEAN-US-Japan indicate that there is scope for further price convergence if the Japanese Yen or the US dollar is to be adopted as the common currency. Nonetheless, a coordinated regional policy should focus on narrowing the yen/dollar fluctuation, ahead of forming a common currency area or monetary union. INTI Publishing House Sdn Bhd 2005 Article PeerReviewed text en http://eprints.intimal.edu.my/299/1/2005_9.pdf Chan, Tze Haw and Lau, Evan Poh Hock (2005) Business Cycles and the Synchronisation Process: A Bounds Testing Approach. INTI Journal, 1 (5). pp. 445-465. ISSN 1675-0284
institution INTI International University
building INTI Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider INTI International University
content_source INTI Institutional Repository
url_provider http://eprints.intimal.edu.my
language English
topic HC Economic History and Conditions
HD28 Management. Industrial Management
spellingShingle HC Economic History and Conditions
HD28 Management. Industrial Management
Chan, Tze Haw
Lau, Evan Poh Hock
Business Cycles and the Synchronisation Process: A Bounds Testing Approach
description To justify the business cycle synchronization (BCS) process among ASEAN-5 (Indonesia, Malaysia, Philippines, Singapore and Thailand), Japan and the United States, the Autoregressive Distributed Log bounds test and the UECM (Unrestricted Error Correction Model) representation advanced in Pesaran et al. (2001) is deployed. Evidently, ASEAN-5 has achieved some important degree of business cycle co fluctuations, attributed to improved intra trading and cross-boarder investments. Nonetheless, the idiosyncratic and common shocks in ASEAN economies are more identical to the Japanese experience rather than the US experience. Comparable patterns of economic development and liberalisation process have created countries (ASEAN-Japan) with similar economic structures, implying that further economic cooperation and currency arrangements in the region are bright. In addition, our findings demonstrate that the bilateral exchange rate stability may not contribute to the business cycle convergence, as in the ASEAN-US case while bilateral exchange rate dispersion has not jeopardised the ASEAN-Japan BCS process. Also, price divergences among the ASEAN-US-Japan indicate that there is scope for further price convergence if the Japanese Yen or the US dollar is to be adopted as the common currency. Nonetheless, a coordinated regional policy should focus on narrowing the yen/dollar fluctuation, ahead of forming a common currency area or monetary union.
format Article
author Chan, Tze Haw
Lau, Evan Poh Hock
author_facet Chan, Tze Haw
Lau, Evan Poh Hock
author_sort Chan, Tze Haw
title Business Cycles and the Synchronisation Process: A Bounds Testing Approach
title_short Business Cycles and the Synchronisation Process: A Bounds Testing Approach
title_full Business Cycles and the Synchronisation Process: A Bounds Testing Approach
title_fullStr Business Cycles and the Synchronisation Process: A Bounds Testing Approach
title_full_unstemmed Business Cycles and the Synchronisation Process: A Bounds Testing Approach
title_sort business cycles and the synchronisation process: a bounds testing approach
publisher INTI Publishing House Sdn Bhd
publishDate 2005
url http://eprints.intimal.edu.my/299/1/2005_9.pdf
http://eprints.intimal.edu.my/299/
_version_ 1644541171708461056
score 13.211869

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