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Reactivating The Dynamism Of Mercosur: A Monetary Approach

Author

Listed:
  • Jose U. MORA
  • Hurtado, Alberto J.
  • Zerpa de Hurtado, Sadcidi

Abstract

Considering the monetary approach, this article analyzes the feasibility of creating a new currency in the Southern Common Market (MERCOSUR) as an option to recover the dynamism observed in the previous decade. The hypothesis suggests that the creation of a new currency is desirable if it is possible to increase the growth rate of real gross domestic product (GDP) and to reduce price volatility. Empirical evidence suggests that the alternative of creating and implementing a new currency in the bloc is desirable and highly feasible due to the positive correlations observed among their countries’ business cycles and domestic currency depreciation rates, as along with the possibility of creating a central bank responsible for the common monetary policy with low inflationary bias.

Suggested Citation

  • Jose U. MORA & Hurtado, Alberto J. & Zerpa de Hurtado, Sadcidi, 2020. "Reactivating The Dynamism Of Mercosur: A Monetary Approach," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 20(1), pages 81-96.
    • Handle: RePEc:eaa:aeinde:v:20:y:2020:i:1_6
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    References listed on IDEAS

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    1. Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
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    4. Alberto Hurtado & Sadcidi Zerpa de Hurtado & José U. Mora Mora, 2019. "Enfoques Teóricos Sobre Unificación Monetaria en MERCOSUR y Lecciones Derivadas de la Experiencia de la Unión Europea," Revista de Economía del Caribe 18091, Universidad del Norte.
    5. José Ustorgio Mora Mora, 2016. "La Alianza del Pacífico y Mercosur: evidencias de convergencia económica," Estudios Gerenciales, Universidad Icesi, vol. 32(141), pages 309-318, December.
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    More about this item

    Keywords

    monetary integration; monetary policy; exchange rate; MERCOSUR;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F15 - International Economics - - Trade - - - Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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