An Evaluation of Monetary Regime Options for Latin America

Andrew Berg (), Paolo Mauro and Eduardo Borensztein

No 2002/211, IMF Working Papers from International Monetary Fund

Abstract: We assess monetary regime options for Latin American countries. The costs of a common currency are likely to outweigh its benefits, as those countries face diverse economic shocks, do not trade much with each other, and are affected by common international financial shocks only to the same extent as the average pair of emerging markets. Unilateral dollarization would be desirable only for those countries where there are strong links to the U.S. economy, the credibility of the monetary authorities is irreversibly lost, and there is keen demand for dollar-denominated financial assets. Finally, some countries in the region seem to be good candidates for meaningful and useful floating.

Keywords: WP; regime; exchange rate; country; exchange rate regimes; currency union; dollarization; common currency; inflation pass-through; inflation rate; inflation stabilization objective; nominal interest rate; floating exchange rate regime; unit of account; Exchange rates; Currencies; Inflation; Exchange rate arrangements; Floating exchange rates; Central America; South America; East Asia; Western Europe (search for similar items in EconPapers)
Pages: 40
Date: 2002-12-01
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Citations: View citations in EconPapers (48)

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Journal Article: An evaluation of monetary regime options for Latin America (2002)
Working Paper: An Evaluation of Monetary Regime Options for Latin America (2002)
Working Paper: An Evaluation of Monetary Regime Options for Latin America (2002)
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