Monetary Integration in the Southern Cone: Mercosur is not like the EU?

Ansgar Belke and Daniel Gros

Working Papers from Oesterreichische Nationalbank (Austrian Central Bank)

Abstract: Evaluating the costs and benefits of exchange rate stability requires a somewhat different approach for Mercosur than for the EU. EU member countries are highly integrated in terms of trade in goods and services. By contrast, trade integration within Mercosur is much more limited, intra-area exchange rates are thus less important than the exchange rate vis-a-vis the dollar and the euro. This contribution analyses the impact of both aspects of financial volatility (exchange rate and interest rate volatility) on investment and labour markets in the Southern Cone, finding that both exchange rate variability (mainly against the dollar and the euro) and (domestic) interest rate volatility have a significant dampening impact on employment and investment, as predicted by our theoretical model.

Keywords: currency union; exchange rate and interest rate variability; job creation; Mercosur; option value effects (search for similar items in EconPapers)
JEL-codes: E42 F36 F42 (search for similar items in EconPapers)
Pages: 88
Date: 2002-08-19
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
https://www.oenb.at/dam/jcr:d39a4ba1-a0e6-411a-b86 ... /wp72_tcm16-6162.pdf (application/pdf)

Related works:
Working Paper: Monetary Integration in the Southern Cone: Mercosur is Not Like the EU? (2002)
Working Paper: Monetary Integration in the Southern Cone: Mercosur Is Not Like the EU (2002)
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:onb:oenbwp:72

Ordering information: This working paper can be ordered from
Oesterreichische Nationalbank, Economic Studies Division, POB 61, A-1011 Vienna, Austria

The price is Free subject to availability.

Access Statistics for this paper

More papers in Working Papers from Oesterreichische Nationalbank (Austrian Central Bank) P.O. Box 61, A-1011 Vienna, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Markus Knell ().