Is Latin America an Optimum Currency Area? Evidence from a Structural Vector Autoregression Analysis (Is Latin America an Optimum Currency Area? Evidence from a Structural Vector Autoregression Analysis)
Titolo Rivista: STUDI ECONOMICI
Autori/Curatori: Foresti Pasquale
Anno di pubblicazione: 2011
Fascicolo: 104
Lingua: EN
Numero pagine: 26
Dimensione file: 735 KBDOI: 10.3280/STE2011-104003
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This paper evaluates the advisability of a monetary union in Latin America applying the theory of optimum currency areas (OCA). The analysis is based on the traditional OCA criteria and it suggests that there is no evidence for any monetary integration in Latin America even at a sub-regional level. Latin American countries have evidenced a low degree of trade integration and asymmetric co-movements among their shocks. Moreover, substantial differences in the speed of adjustment and in the size of shocks are found. Hence, higher policy coordination seems to be necessary before starting any economic integration process in Latin America.
Keywords: Optimum Currency Areas, Asymmetric Shocks, Latin America, sVAR. .JEL Code: C15, C30, F15, F42
