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

Listed author(s):
  • 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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File URL: http://www.accessecon.com/pubs/EB/2008/Volume6/EB-08F30044A.pdf
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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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  14. Busse, Matthias & Hefeker, Carsten & Koopmann, Georg, 2006. "Between two poles: A dual currency board for Mercosur," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 349-362, December.
  15. Minsoo Lee, 2003. "Common Trend and Common Currency: Australiaand New Zealand," International Journal of Business and Economics, College of Business and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 2(2), pages 155-165, August.
  16. Camarero, Mariam & Flores, Renato Jr. & Tamarit, Cecilio R., 2006. "Monetary union and productivity differences in Mercosur countries," Journal of Policy Modeling, Elsevier, vol. 28(1), pages 53-66, January.
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