Coordination of monetary and exchange policies in Mercosur: An empirical analysis between 2000 and 2013
DOI:
https://doi.org/10.4013/pe.2015.112.03Abstract
This study aims at making a comparative analysis of the effects of monetary and exchange rate shocks under floating exchange rate regimes in the four member countries of Mercosur – Brazil, Argentina, Uruguay and Paraguay. For this, it estimated vector error correction models (VEC) for each of the Mercosur countries, using the variables inflation, interest rate, exchange rate, and international reserves. It was found that under the adoption of floating exchange rate regimes by all the countries studied, there is no evidence of macroeconomic convergence in the economies of Mercosur. The implication is that the process of integration in the region may be compromised because they increase the cost of the lack of macroeconomic coordination.
Keywords: VEC, co-integration, optimum currency area, Mercosul.
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