Munich Personal RePEc Archive

Is Mercosur an optimum currency area?

Neves, J. Anchieta and Stocco, Leandro and Da Silva, Sergio (2007): Is Mercosur an optimum currency area?

[img]
Preview
PDF
MPRA_paper_2758.pdf

Download (235kB) | Preview

Abstract

We find that generalized purchasing power parity does not hold for Mercosur, and thus that the South American trade group does not constitute an optimum currency area. We also find that the role of the United States cannot be neglected in the region, and that high short run volatility of real exchange rates is accompanied by slow adjustment processes of between 2 and 16 years (PPP puzzle).

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.