Disentangling business cycles and macroeconomic policy in Mercosur: a VAR and unobserved components model approaches

Jean-Pierre Allegret () and Alain Sand-Zantman ()
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Jean-Pierre Allegret: GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique
Alain Sand-Zantman: GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper analyses the feasibility of a monetary union within the Mercosur, focusing on cycle synchronicity. Three questions are addressed, concerning respectively the features of shocks hitting each member, the impact of exchange rate regime differences on countries' responses and the share of common and idiosyncratic components in shocks and policy responses. Shocks are identified through identical country-VARs. This paper concludes that there exists a weak cycle synchronization, due to asymmetric shocks and divergences in policy responses. The endogenous approach in OCA theory can advise the adoption of a common nominal anchor, in order to speed up convergence.

Keywords: Business Cycles; OCA; Co-movement; VAR; Unobserved components model; Mercosur (search for similar items in EconPapers)
Date: 2007
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00238495
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Citations: View citations in EconPapers (7)

Published in Journal of Economic Integration, 2007, 22 (3), pp.482-514

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Related works:
Journal Article: Disentangling Business Cycles and Macroeconomic policy in Mercosur: a VAR and an Unobserved Components Models Approaches (2007)
Working Paper: Disentangling business cycles and macroeconomic policy in Mercosur: a VAR and unobserved components model approaches (2006)
Working Paper: Disentangling business cycles and macroeconomic policy in Mercosur: a VAR and unobserved components model approaches (2006)
Working Paper: Disentabling business cycles and macroeconomic policy in Mercosur: a VAR and unobserved components model approaches (2006)
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