| dc.description.abstract | Deepening economic integration in ASEAN+6, bring up the idea to form a common currency in this region. Therefore, this study aims to analyze the feasibility to establish a common currency in ASEAN+6 and determine the appropriate currency used as a common currency. The data used in this study are monthly time series data from January 2000 to June 2012. Generalized Approach Purchasing Power Parity (G-PPP) analysis using the Vector Error Correction Model (VECM) method was conducted to answer the first goal. The results show the validity of the G-PPP and Optimum Currency Area in ASEAN+6. Therefore, ASEAN+6 as a whole, could make preparations to conduct monetary union step by step. Subsequently, a second analysis is exchange rate convergence analysis, which is to determine which currency is suitable to be used as a common currency in this region. In this analysis U.S. Dollar, Chinese Yuan, and Japanese Yen are used as based currencies. The selection of those currencies were based on previous studies. The results show that the co-movements of ASEAN+6 countries currency have a strong relationship with U.S. Dollar compared to Chinese Yuan and Japanese Yen. Furthermore, this study suggests the use of China's Yuan as a common currency in ASEAN+6. | en |
