This paper addresses the question of macroeconomic integration in the Asia-Pacific region. Economically, the analysis is based on the notions of stochastic long-run convergence and business cycle coherence. The econometric procedure consists of tests for cointegration, the examination of vector error correction models, different variants of common cycle tests and forecast error variance decompositions. Results in favor of cyclical synchrony can be partly established, and are even exceeded by the broad evidence for equilibrium relations. In this domain, several leading countries have been identified.

The last few decades of economic development in Asia-Pacific were marked by vibrant dynamics, as the region has witnessed extraordinary growth, as well as striking inequality and severe crises. A recent example is the Asian Financial Crisis of 1997-98, which occurred in a period of booming economy and deepening interaction between the region's countries. While some nations could make considerable progress, others had far less participation in the dynamic development process. As a matter of fact, the members of the main regional organizations, like ASEAN and APEC, range from highly industrialized to developing countries, and the integration concepts include `open regionalism' to discriminatory trade policies. Until now, progress in convergence is driven more by market mechanisms than by institutionalized cooperation.

From the empirical point of view, it remains an open task to examine the ambiguous character of the economy of Asia-Pacific, even after some studies, mainly on shock identification and income convergence (Bayoumi and Eichengreen, 1994; Lee et al., 2004; and Weber, 2007), have shed light on this topic. The special regional scenery with its varying economic conditions and political historical backgrounds raises several questions: Does Asia-Pacific justify using the notion of one economic region? In detail, do the different national economies share common structural properties, and do the mutual interlinkages boost transmission effects between them? Given incomparable stages of industrialization, is there any evidence for the presence of several highly integrated regional subgroups? And furthermore, is it possible to extract a leading role played by any one nation, or at least to determine a certain direction of the overall adjustment pattern?

Applied Economics Journal, Economic Development, ASEAN Countries, Asian Financial Crisis, Gross Domestic Product , GDP, Macroeconomic Convergence, Asian Economies, Econometric Methods, Microeconomic Parameters, Economic Integration, Econometric Theory, Cointegration Analysis, Economic Leadership, Economic Power, Cointegration Analysis.