A recent study by the author on the asymmetry of (supply, monetary and real or demand shocks) shocks of the 5 largest economies of ASEAN (which were called the big5) strongly suggested that Singapore and Malaysia represent the core group, with Thailand close behind and Philippines and Indonesia constituting the periphery of ASEAN.
In actual fact, in that study, Singapore and Malaysia yielded the lowest cumulative long-run effect of supply, monetary and demand shocks to prices, output and real effective exchange rates. Thailand was close behind, the Philippines next and Indonesia was found to be country that experienced the largest asymmetric movements in the sample.
The aim of this paper is on one hand to study the main reasons behind the pattern of asymmetric shocks found in that study, that is, to try to explain why some countries experience less asymmetric shocks and thus are more prepared (ceteris paribus) to press forward with economic and monetary integration than others, and on the other hand to study how these countries perform in other important optimum currency area criteria.
For that purpose, I explore (and expand) a version of some econometric models first used by Rose and Engel to infer the existing level of de facto integration across ASEAN´s 5 largest economies. This study will include a study of the following four sections: the degree of openness, the degree of price integration, the level of business cycle synchronization and the degree of risk sharing.
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