ABSTRACT
In this chapter, we aim to investigate the conditions for monetary integration in Asia and the EU and to measure productivity growth in export goods and non-tradable goods. One of the necessary conditions for long-term viability of monetary integration is that the relative prices of export goods between member countries do not change greatly. For instance, if Germany's export prices were constant, the increase in Italy's export prices would contribute to Italy's cumulative trade deficit. Before monetary integration, this cumulative trade imbalance was prevented by the adjustment of exchange rates, such as the appreciation of the mark or the depreciation of the lira. After monetary integration, however, such adjustment became impossible. In the original EU member countries, the above necessary condition for monetary integration, that is, stability in the relative price of export goods, was accomplished by equalizing the inflation rate to a low level, as follows.
