Monetary Integration in the Southern Cone: Mercosur is Not Like the EU?
AbstractEvaluating the costs and benefits of exchange rate stability requires a somewhat different approach for Mercosur than for the EU. EU member countries are highly integrated in terms of trade in goods and services. By contrast, trade integration within Mercosur is much more limited, intra-area exchange rates are thus less important than the exchange rate vis-à-vis the dollar and the euro. This contribution analyses the impact of both aspects of financial volatility (exchange rate and interest rate volatility) on investment and labor markets in the Southern Cone, finding that both exchange rate variability (mainly against the dollar and the euro) and (domestic) interest rate volatility have a significant dampening impact on employment and investment, as predicted by our theoretical model.
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Bibliographic InfoPaper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 188.
Date of creation: Oct 2002
Date of revision:
Other versions of this item:
- Ansgar Belke & Daniel Gros, 2002. "Monetary Integration in the Southern Cone: Mercosur Is Not Like the EU," Diskussionspapiere aus dem Institut fÃ¼r Volkswirtschaftslehre der UniversitÃ¤t Hohenheim 204/2002, Department of Economics, University of Hohenheim, Germany.
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-11-18 (All new papers)
- NEP-CBA-2002-11-18 (Central Banking)
- NEP-MON-2002-11-18 (Monetary Economics)
- NEP-NET-2002-11-18 (Network Economics)
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