On shock symmetry in South America: New evidence from intra-Brazilian real exchange rates
No 5316, CQE Working Papers from Center for Quantitative Economics (CQE), University of Muenster
I analyze the symmetry of economic shocks in South America by comparing the volatility of unexpected changes in bilateral real exchange rates within an existing monetary union, the intra-Brazilian currency area, with the volatility found in real exchange rates between Brazilian regions and nine South American countries for the 1994-2013 time period. My results show that shocks across South America are substantially less symmetric than shocks within Brazil, indicating potentially high costs if a continent-wide monetary union should eliminate nominal exchange rate exibility between countries.
Keywords: Optimum currency area; Real exchange rates; Monetary union (search for similar items in EconPapers)
JEL-codes: F31 F33 O54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mon, nep-opm and nep-sog
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Persistent link: https://EconPapers.repec.org/RePEc:cqe:wpaper:5316
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