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Is Latin America an Optimum Currency Area? Evidence from a Structural Vector Autoregression Analysis
Journal Title: STUDI ECONOMICI  
Author/s: Foresti Pasquale 
Year:  2011 Issue: 104 Language: English 
Pages:  26 Pg. 43-68 FullText PDF:  735 KB
DOI:  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

Foresti Pasquale, Is Latin America an Optimum Currency Area? Evidence from a Structural Vector Autoregression Analysis in "STUDI ECONOMICI " 104/2011, pp. 43-68, DOI:10.3280/STE2011-104003

   

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