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Does a Monetary Union protect again shocks? An assessment of Latin American integration

  • Jean-Pierre Allegret


    (GATE - Groupe d'analyse et de théorie économique - CNRS - UL2 - Université Lumière - Lyon 2 - Ecole Normale Supérieure Lettres et Sciences Humaines)

  • Alain Sand-Zantman


    (GATE - Groupe d'analyse et de théorie économique - CNRS - UL2 - Université Lumière - Lyon 2 - Ecole Normale Supérieure Lettres et Sciences Humaines)

This paper analyses the monetary consequences of the Latin-American trade integration process. We consider a sample of five countries -Argentina, Brazil, Chile, Mexico and Uruguay- spanning the period 1991-2007. The main question raised pertains to the feasibility of a monetary union between L.A. economies. To this end, we study whether this set of countries is characterized by business cycle synchronization with the occurrence of common shocks, a strong similarity in the adjustment process and the convergence of policy responses. We focus especially our attention on two points. First, we tryto determine to what extent international disturbances influence the domestic business cycles through trade and/or financial channels. Second, we analyze the impact of the adoption of different exchange rate regimes on the countries' responses to shocks. All these features are the main issues in the literature relative to regional integration and OCA process.

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Paper provided by HAL in its series Post-Print with number halshs-00371069.

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Date of creation: 2009
Date of revision:
Publication status: Published in Journal of Policy Modeling / Journal of Policy Modelling, 2009, 31 (n° 1), pp. 102-118. <10.1016/j.jpolmod.2008.09.002>
Handle: RePEc:hal:journl:halshs-00371069
DOI: 10.1016/j.jpolmod.2008.09.002
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  19. Larrain Felipe & Jose Tavares, 2003. "Regional Currencies Versus Dollarization: Options for Asia and the Americas," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 6(1), pages 35-49.
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