Is Latin America an Optimal Currency Area? Evidence from a Structural Vector Auto-regression analysis

Pasquale Foresti ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper evaluates the advisability of a monetary union in Latin America applying the theory of optimum currency areas (OCA). The analysis, based on the traditional OCA criteria, 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, important differences in the speed of adjustment and size of shocks are found. Higher policy coordination seems to be necessary before starting any economic integration process in Latin America.

JEL-codes: C32 F0 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mon
Date: 2007-08, Revised 2008-04
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:2961

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