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The Cost of Financial Market Variability in the Southern Cone

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  • Ansgar Belke
  • Daniel Gros

Abstract

The paper evaluates the costs and benefits of exchange rate (and interest rate) stability for the countries in the Southern Cone of Latin America. It investigates the correlation between two aspects of financial market volatility, namely that of the exchange rate and interest rate volatility, during the last three decades, comparing the situation in the Southern Cone to that in the eu (pre-emu). It also analyses the impact of both aspects of financial volatility on investment and labor markets in the Southern Cone, finding that both exchange rate and interest rate variability have a significant dampening impact on employment and investment.

Suggested Citation

  • Ansgar Belke & Daniel Gros, 2003. "The Cost of Financial Market Variability in the Southern Cone," Revue économique, Presses de Sciences-Po, vol. 54(5), pages 1091-1115.
    • Handle: RePEc:cai:recosp:reco_545_1091
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    References listed on IDEAS

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    Cited by:

    1. Sánchez-Martín, Miguel Eduardo & de Arce, Rafael & Escribano, Gonzalo, 2014. "Do changes in the rules of the game affect FDI flows in Latin America? A look at the macroeconomic, institutional and regional integration determinants of FDI," European Journal of Political Economy, Elsevier, vol. 34(C), pages 279-299.
    2. Ansgar Belke & Ralph Setzer, 2004. "Contagion, herding and exchange-rate instability — A survey," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 39(4), pages 222-228, July.
    3. Ansgar Belke & Lars Wang, 2005. "The Costs and Benefits of Monetary Integration Reconsidered: How to Measure Economic Openness," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 262/2005, Department of Economics, University of Hohenheim, Germany.

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