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Is Mercosur an optimum currency area? An assessment using generalized purchasing power parity

  • Sergio Da Silva

    ()

    (Department of Economics, Federal University of Santa Catarina)

  • Leandro Stocco

    ()

    (Department of Economics, University of Sao Paulo)

  • J. Anchieta Neves

    ()

    (Petrobras)

We consider the cointegration approach of generalized purchasing power parity to show that a necessary condition for Mercosur to be an optimum currency area is met. Yet there are still large cross-country differences as to cast doubt on the success of either monetary union or official dollarization. The PPP puzzle is also found to occur in Mercosur.

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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 6 (2008)
Issue (Month): 29 ()
Pages: 1-13

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Handle: RePEc:ebl:ecbull:eb-08f30044
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