Mexico versus Canada: Stability Benefits from Making Common Currency with USD?

George von Furstenberg

Journal of Entrepreneurial Finance, 2005, vol. 10, issue 2, 15-37

Abstract: Using a de facto classification of exchange-rate regimes, this paper investigates how the volatility of PPP-GDP per person and per hour of work is associated with such regimes in Mexico and in Canada. It finds that, for Mexico unlike Canada, the macroeconomic volatility left is much greater during periods when the nominal exchange rate with USD changes appreciably than when it is quasi-pegged. However, Mexico cannot safely peg to USD except through formal US-dollarization. Hence this finding suggests that the stability benefits of monetary union are greatest for emerging-market countries inside an economically integrating region and non-existent for financially highly advanced countries.

Keywords: Common Currency; Currency; Mexico; Canada; USA; USD (search for similar items in EconPapers)
JEL-codes: G15 O11 O51 O54 (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://jefsite.org/RePEc/pep/journl/jef-2005-10-2-b-furstenberg.pdf (application/pdf)

Related works:
Journal Article: Mexico versus Canada: Stability benefits from making common currency with USD? (2006)
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: https://EconPapers.repec.org/RePEc:pep:journl:v:10:y:2005:i:2:p:15-37

Access Statistics for this article

More articles in Journal of Entrepreneurial Finance from Pepperdine University, Graziadio School of Business and Management Contact information at EDIRC.
Bibliographic data for series maintained by Craig Everett ().