Real and Financial Integration in East Asia

Soyoung Kim, Jong-Wha Lee

Research output: Contribution to journalArticle

23 Citations (Scopus)

Abstract

This paper examines the real and financial integration of East Asian economies, by comparing the degree of real vs financial and global vs regional integration, before vs after the Asian crisis. First, price and quantity measures such as the size of intra- and inter-regional trade, cross-border financial assets, stock return correlation, and interest rate differentials are investigated. Second, the structural panel vector autoregression (VAR) model is constructed to analyze macroeconomic consequences of real and financial integration such as cross-country output and consumption relation. The results suggest that (i) the degree of real integration significantly increased after the crisis, both regionally and globally; (iii) quantity and price measures showed an increased financial integration after the crisis, but the consumption relation did not; (iv) the degree of regional financial integration is smaller than that of global financial integration, based on the consumption relation; and (v) financial integration lags real integration, especially for regional integration.

Original languageEnglish
Pages (from-to)332-349
Number of pages18
JournalReview of International Economics
Volume20
Issue number2
DOIs
Publication statusPublished - 2012 May 1

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vector autoregression
regional trade
interest rate
macroeconomics
regional integration
Asia
consumption
assets
price
economy
border

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development

Cite this

Real and Financial Integration in East Asia. / Kim, Soyoung; Lee, Jong-Wha.

In: Review of International Economics, Vol. 20, No. 2, 01.05.2012, p. 332-349.

Research output: Contribution to journalArticle

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