Real and Financial Integration in East Asia

Soyoung Kim, Jong Wha Lee

    Research output: Contribution to journalArticlepeer-review

    40 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

    ASJC Scopus subject areas

    • Geography, Planning and Development
    • Development

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