IDEAS home Printed from https://ideas.repec.org/p/idb/brikps/2647.html
   My bibliography  Save this paper

Exchange Rate Instability in MERCOSUR: Causes, Problems and Possible Solutions

Author

Listed:
  • Machinea, José Luis

Abstract

This paper formed part of a Conference "Mercosur: In Search of a New Agenda" held in the Getulio Vargas Foundation in Rio de Janeiro in June 2003. The purpose of the Conference was to was to examine future directions for Mercosur in light of emerging political dynamics pointing to renewed interest in deepening the initiative after a turbulent 1999-2002. The papers and the conference were supported by the Integration and Regional Programs Department of the Inter-American Development Bank through its Special Initiative on Trade and Integration. The Department is grateful for the collaboration of the Foundation and in particular to Professor Renato Flores. Taking into account the relevancy of exchange variability for integration agreements, this paper evaluates the importance of exchange volatility among member countries of a free trade area and some possible solutions. Measures to prevent or reduce these fluctuations in terms of macroeconomic policy coordination are also examined. Additionally, the creation of a monetary union within MERCOSUR, macroeconomic policy coordination, and a compensation mechanism to tackle exchange variability are also analyzed. Most relevant elements to advance in macroeconomic cooperation in MERCOSUR are studied, and an assessment is made of how exchange variability could be reduced, should exchange regimes be excluded from this coordination.

Suggested Citation

  • Machinea, José Luis, 2004. "Exchange Rate Instability in MERCOSUR: Causes, Problems and Possible Solutions," IDB Publications (Working Papers) 2647, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:2647
    as

    Download full text from publisher

    File URL: https://publications.iadb.org/publications/english/document/Exchange-Rate-Instability-in-MERCOSUR-Causes-Problems-and-Possible-Solutions.pdf
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idb:brikps:2647. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Felipe Herrera Library (email available below). General contact details of provider: https://edirc.repec.org/data/iadbbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.