• International Area Studies Review
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• v.14 no.2
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• pp.61-78
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• 2010

The paper is basically attempted to reveal a possibility of monetary unification and setting an anchor currency in North East Asian economies such as South Korea, China, and Japan. The Cobb-Douglas utility function is tentatively built by a Walrasian economic framework. Korean Won(KRW) is represented for a numeraire in a structural model, and the estimation of a parameter is performed by 2SLS and GARCH-M models. Empirical evidence is found that not only monetary unification itself in this regime seems not to be practicable, but also setting an anchor currency by Chinese Yuan(CNY) or Japanese Yen(JPY) is also inappropriated due to the fact that the estimated parameter is not converged to a unity. Walrasian equilibria are enhanced by the convergence to a unity in the model. It also has to be mentioned that a number of necessary and sufficient conditions should be fulfilled prior to discuss a monetary unification in North East Asian economies. Instead, Asia currency unit(ACU) is more feasible in reality.