Does a Monetary Union protect again foreign shocks? An assessment of Latin American integration using a Bayesian VAR

Jean-Pierre Allégret () and Alain Sand-Zantman ()
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Jean-Pierre Allégret: GATE, University of Lyon, CNRS, ENS-LSH, Centre Léon Bérard, France
Alain Sand-Zantman: GATE, University of Lyon, CNRS, ENS-LSH, Centre Léon Bérard, France

No 809, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: This paper analyses the monetary consequences of the Latin-American trade integration process. We consider a sample of five countries –Argentina, Brazil, Chile, Mexico and Uruguay- spanning the period 1991-2007. The main question raised pertains to the feasibility of a monetary union between L.A. economies. To this end, we study whether this set of countries is characterized by business cycle synchronization with the occurrence of common shocks, a strong similarity in the adjustment process and the convergence of policy responses. We focus especially our attention on two points. First, we try to determine to what extent international disturbances influence the domestic business cycles through trade and/or financial channels. Second, we analyze the impact of the adoption of different exchange rate regimes on the countries’ responses to shocks. All these features are the main issues in the literature relative to regional integration and OCA process.

Keywords: bayesian VAR; business cycles; Latin American countries; optimum currency area (search for similar items in EconPapers)
JEL-codes: C32 E32 F42 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2008
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-opm
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ftp://ftp.gate.cnrs.fr/RePEc/2008/0809.pdf (application/pdf)

Related works:
Working Paper: Does a Monetary Union protect against foreign shocks? An assessment of Latin American integration using a Bayesian VAR (2009)
Working Paper: Does a Monetary Union protect again foreign shocks? An assessment of Latin American integration using a Bayesian VAR (2008)
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