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An Assessment of the Case for Monetary Union or Official Dollarization in Argentina, Brazil, Chile, Uruguay and Venezuela

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Author Info
Paul Hallwood (University of Connecticut)
Ian W. Marsh (City University Business School and CEPR)
Joerg Scheibe (University of Oxford)

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Abstract

We use a data set covering the whole period of Argentina's currency board and most of that spanned by the Mercosur trade agreement to examine the case for either a Latin American monetary union or monetary union with the USA (through official dollarization). Our econometric evidence using VAR techniques indicates that macroeconomic shocks are still so highly asymmetric in Latin America and between Latin American countries and the USA as to make monetary union or official dollarization somewhat doubtful policies.

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File URL: http://www.econ.uconn.edu/working/2004-13.pdf
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Publisher Info
Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2004-13.

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Length: 29 pages
Date of creation: Jul 2004
Date of revision:
Handle: RePEc:uct:uconnp:2004-13

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Related research
Keywords: dollarization; monetary union; Argentina; Brazil; Chile; Uruguay; Venezuela;

Find related papers by JEL classification:
F31 - International Economics - - International Finance - - - Foreign Exchange
F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Frankel, Jeffrey A & Rose, Andrew K, 1996. "The Endogeneity of the Optimum Currency Area Criteria," CEPR Discussion Papers 1473, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Ferdinand Fichtner, 2003. "Germany and the European Business Cycle - An Analysis of Causal Relations in an International Real Business Cycle Model," IWP Discussion Paper Series 01/2003, Institute for Economic Policy, Cologne, Germany. [Downloadable!]
  3. Alan C. Stockman, 1989. "Sectoral and National Aggregate Disturbances to Industrial Output in Seven European Countries," NBER Working Papers 2313, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Heathcote, Jonathan & Perri, Fabrizio, 2002. "Financial Globalization and Real Regionalization," CEPR Discussion Papers 3268, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. Carlos Carrillo & Carmen A. Li, 2002. "Trade Blocks and the Gravity Model: Evidence from Latin American Countries," Economics Discussion Papers 542, University of Essex, Department of Economics. [Downloadable!]
  6. Hochreiter, Eduard & Siklos, Pierre L., 2002. "Alternative exchange-rate regimes: The options for Latin America," The North American Journal of Economics and Finance, Elsevier, vol. 13(3), pages 195-211, December. [Downloadable!] (restricted)
  7. Jeffrey A. Frankel & Andrew K. Rose, 2000. "Estimating the Effect of Currency Unions on Trade and Output," NBER Working Papers 7857, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Hughes Hallett, A. & Piscitelli, Laura, 2002. "Does trade integration cause convergence?," Economics Letters, Elsevier, vol. 75(2), pages 165-170, April. [Downloadable!] (restricted)
  9. Sebnem Kalemli-Ozcan & Bent E. Sorensen & Oved Yosha, 2000. "Risk sharing and industrial specialization ; regional and international evidence," Research Working Paper RWP 00-06, Federal Reserve Bank of Kansas City. [Downloadable!]
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  10. Olivier Jean Blanchard & Danny Quah, 1988. "The Dynamic Effects of Aggregate Demand and Supply Disturbance," Working papers 497, Massachusetts Institute of Technology (MIT), Department of Economics.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jean-Pierre Allegret & Alain Sand, 2007. "Modeling the impact of real and financial shocks on Mercosur: the role of the exchange rate regime," Working Papers 0701, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure. [Downloadable!]
  2. Neves, J. Anchieta & Stocco, Leandro & Da Silva, Sergio, 2007. "Is Mercosur an optimum currency area?," MPRA Paper 2758, University Library of Munich, Germany. [Downloadable!]
  3. Jean-Pierre Allegret & Alain Sand-Zantman, 2009. "Modeling the Impact of Real and Financial Shocks on Mercosur: The Role of the Exchange Rate Regime," Open Economies Review, Springer, vol. 20(3), pages 359-384, July. [Downloadable!] (restricted)
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This page was last updated on 2009-12-2.


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