EXTENDED ABSTRACT The East Asian region has experienced

astonishing economic growth and was widely cited as an exemplar of sustained economic growth over the past few decades. Compared to the European experience, regional integration in East Asia has occurred in the absence of a formal institutional framework, and is more market-driven. Such a trend towards spontaneous regional integration is a result of progressive outward orientation of individual economies ’ trade and investment policies, and the unilateral liberalization of goods and capital markets. High degree of integration in the East Asian region would greatly shape the economic structure of each individual economy and has direct implications for the effectiveness of domestic stabilization policy and policy coordination. It is therefore the major objective of this paper to empirically examine the feasibility of forming a monetary union in East Asia by assessing the real output co-movements among these economies. As suggested by the optimum currency area theory (OCA) that losing monetary independence would be the major cost for adopting a common currency, it would be less costly for the economies to form a monetary union if the business cycles are synchronized across countries. In recent years, there has been a number of studies empirically assessing the feasibility of forming a monetary union in the East Asian region from a symmetric shock perspective (se