Common currency and economic integration in mercosur

Márcio Holland () and Luiz Carlos Bresser-Pereira ()

No 190, Textos para discussão from Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil)

Abstract: Latin America has a long history of attempts to achieve regional integration, yetsuccess has been modest. This paper contends that this is essentially due not so much toprotectionist practices in the various countries, but to the lack of a common currency, or, atleast, of a tightly managed exchange rate band. We reviewed the optimum currency areacriteria that indicate it is prudent to increase economic integration before attempting toestablish exchange rates coordination. Yet, we show that in the Mercosul there are already theminimal requirements to work on this direction. Diminishing exchange rate instability couldencourage trade and investment flows across Latin American economies. We also performed asimplified exercise to understand how feasible would be the efforts to achieve exchange rateparity stability in the two larger economies in the region (Brazil and Argentina) and stepforward toward adopting a common currency.

New Economics Papers: this item is included in nep-mon and nep-opm
Date: 2009-06-05
View list of references

Downloads: (external link)
http://virtualbib.fgv.br/dspace/bitstream/10438/26 ... resser%20Pereira.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:fgv:eesptd:190

Access Statistics for this paper

More papers in Textos para discussão from Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil)
Contact information at EDIRC.
Series data maintained by Núcleo de Computação da EPGE ().