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Title:Between Two Poles: Matching Trade and Exchange Rate Regimes in Mercosur PDF Logo
Authors:Busse, Matthias
Hefeker, Carsten
Koopmann, Georg
Issue Date:2004
Series/Report no.:HWWA discussion paper 301
Abstract:The paper reviews exchange rate options for Mercosur countries. We start from the observation that most of the countries in the region have a longstanding tendency to adopt fixed exchange rates, and ask how such a system could best be designed. The Argentine crisis has demonstrated that unilateral currency pegs imply the risk of serious misalignments with other trading partners and subsequent realignments. The standard basket peg is not a solution because of its limited transparency and credibility. We therefore discuss a proposal to create dual currency boards that could be a workable solution for the Mercosur countries.
Subjects:Exchange Rate Regime
Currency Board
Latin America
Mercosur
JEL:F3
F4
Document Type:Working Paper
Appears in Collections:HWWA Discussion Paper, Hamburgisches Welt-Wirtschafts-Archiv

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