Is Mercosur an optimum currency area?

J. Anchieta Neves, Leandro Stocco and Sergio Da Silva

MPRA Paper from University Library of Munich, Germany

Abstract: We find that generalized purchasing power parity does not hold for Mercosur, and thus that the South American trade group does not constitute an optimum currency area. We also find that the role of the United States cannot be neglected in the region, and that high short run volatility of real exchange rates is accompanied by slow adjustment processes of between 2 and 16 years (PPP puzzle).

Keywords: generalized purchasing power parity; optimum currency area; Mercosur; PPP puzzle (search for similar items in EconPapers)
JEL-codes: F31 F36 (search for similar items in EconPapers)
Date: 2007-04-16
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:2758

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