The Economic Foundations of Monetary Cooperation between China and Central Asian Countries——Based on the Benefit-Cost Model of Optimal Currency Areas
ZHANG Jin-bo1, ZHANG Wei-jin1, ZHANG Jiang-yang2
1.Jinhe Center for Economic Research,Xi’an Jiaotong University,Xi’an 710049,China; 2.School of Finance and Economics, Xi’an Jiaotong University,Xi’an 710049,China
Abstract：
This paper analyzed the development of monetary integration about China, Russia and 6 central Asian countries. Moreover, it also analyzed the feasibility of RMB that becoming the regional anchor currency comparing with Ruble. As we all known, OCA theory is the main theoretical foundation that investigate the degree of monetary integration in a region. In this paper we simplified DMP model into a static new model, which is the new achievement of OCA theory. By this new model we interpreted the costs and benefits of optimal currency area from both big country and small country’s perspective. Based on the new model, we treated the change rate about nominal exchange rate, inflation and the correlation of the real business cycle as the empirical indicators in order to measure the economic situation about China and the seven other countries. Based on the thorough analysis about the degree of monetary integration about China, Russia and 6 central Asian countries, this paper provided economic foundation for the policy decision of RMB’s regionalization.
ZHANG Jin-bo, ZHANG Wei-jin, ZHANG Jiang-yang.The Economic Foundations of Monetary Cooperation between China and Central Asian Countries——Based on the Benefit-Cost Model of Optimal Currency Areas[J] Economic Survey, 2015,V32(1): 43-49
2015 
