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Comparative analysis on the feasibility of a South American monetary union

Author

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  • José U. Mora M.

    (Universidad de Los Andes, Departamento de Economía.)

Abstract

This paper presents an evaluation of how feasible would the establishment of a monetary union amongst the South American countries considering the methodology of the macroeconomic convergence degree. The empirical results indicate that a monetary union in South America is possible only if the governments commit themselves to establish and fulfill the rules of previous agreements on regional economic integration with the purpose of improving not only multilateral trade but also economic cooperation among them. According to the economic convergence index, it was found that South American economies, excluding Bolivia, have degrees of convergence similar to the corresponding for members of EMU, excluding Portugal and Ireland. Brazil is the economy that exhibits the best (the lowest) convergence index while Bolivia reveals the highest. The analysis of partial correlations does not show results as promising as the ones shown by the degree of convergence. On the contrary, these contrast with the ones obtained for European countries.

Suggested Citation

  • José U. Mora M., 2001. "Comparative analysis on the feasibility of a South American monetary union," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 26(17-18), pages 53-72, January-D.
    • Handle: RePEc:ula:econom:v:26-27:y:2001-2002:i:17-18:p:53-72
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