Monetary and Exchange Rate Arrangements for Nafta

Barry Eichengreen and Tamim Bayoumi

No 1993/020, IMF Working Papers from International Monetary Fund

Abstract: This paper considers the extent to which the North American Free Trade Area (NAFTA) meets the criteria for a common currency area. NAFTA is compared with the EC, a regional grouping for which initial plans for a monetary union are already in place. Most of the anticipated benefits from a monetary union in the EC apply with equal force to NAFTA. However, because the underlying disturbances are more diverse across members of NAFTA, the costs of abandoning the exchange rate instrument are likely to be higher. This is particularly true when NAFTA is compared to the EC’s continental core.

Keywords: WP; demand shock; single currency; supply curve; EC member country; exchange rate uncertainty; supply and demand disturbance; supply disturbance; aggregate supply supply curve; Supply shocks; Monetary unions; Exchange rates; Conventional peg; North America; Europe; Southern Europe (search for similar items in EconPapers)
Pages: 54
Date: 1993-03-01
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Citations: View citations in EconPapers (11)

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Journal Article: Monetary and exchange rate arrangements for NAFTA (1994)
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1993/020

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