Disentangling Business Cycles and Macroeconomic policy in Mercosur: a VAR and an Unobserved Components Models Approaches

Jean-Pierre Allegret ()
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Jean-Pierre Allegret: Lumière Lyon2, Postal: Jean-Pierre Allegret, GATE (UMR 5824 CNRS) and University Lumière, Lyon2,

Journal of Economic Integration, 2007, vol. 22, 482-514

Abstract:

This paper analyses the feasibility of a monetary union within the Mercosur, focusing on cycle synchronicity. Three questions are addressed, concerning respectively the features of shocks hitting each member, the impact of exchange rate regime differences on countries’ responses and the share of common and idiosyncratic components in shocks and policy responses. Shocks are identified through identical country-VARs. This paper concludes that there exists a weak cycle synchronization, due to asymmetric shocks and divergences in policy responses. The endogenous approach in OCA theory can advise the adoption of a common nominal anchor, in order to speed up convergence

Keywords: Business Cycles; OCA; Co-movement; VAR; Unobserved components model; Mercosur (search for similar items in EconPapers)
JEL-codes: C32 E32 F42 (search for similar items in EconPapers)
Date: 2007
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Related works:
Working Paper: Disentangling business cycles and macroeconomic policy in Mercosur: a VAR and unobserved components model approaches (2007)
Working Paper: Disentangling business cycles and macroeconomic policy in Mercosur: a VAR and unobserved components model approaches (2006)
Working Paper: Disentangling business cycles and macroeconomic policy in Mercosur: a VAR and unobserved components model approaches (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0404

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