The dissertation focuses on some OCA properties of ASEAN + 3 countries and examines those of European countries as empirical evidence of the working of endogenous OCA theory. Chapter 2 examines business cycle synchronization by using the time horizon of output growth that is consistent with the time lag of policies. While short run output fluctuations should be left for automatic stabilizers such as taxes and marginal propensity to import, discrete policies should stabilize output in the medium and long run. Therefore, the ideal level of output growth correlations should be low in the short run and high in the medium and long run. The ASEAN group complied with the hypothesis better than the East Asian group. As a robustness check, deviations from trend (by an HP filter) were calculated. The results of European countries do not provide evidence of strong OCA endogeneity.;Moreover, instead of predetermining the subgroups, combinations of different numbers (3-6) of countries were searched to find those with the greatest difference between annual growth correlations and 2-year growth correlations as well as between annual and 3-year growth correlations. Smaller groups (3-4 countries) comprised of ASEAN countries and some East Asian countries were joined in the larger groups (5-6 countries).;Chapter 3 investigated the extent of financial integration since regional capital markets enable risk-sharing across countries and lessen the need for output stabilization. Comparing the levels of short-run and medium-run consumption growth and those of output growth implied that financial markets in Asia are not well-integrated. Surprisingly, neither results were different in the European case.;Chapter 4 analyzed the role of trade as an underlying factor in increasing business synchronization of countries within a currency union. One emerging trend in Asia is the vertical integration of production that leads to intra-industry trade. It is possible that the comovements of added values in participating countries are driven by external factors such as demand in the U.S. due to the network of production sharing. This is something more fundamental than traditional import and export transactions. However, the results from panel regressions show that FDIs in this region contribute negatively to the output comovements between countries.
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