Hostname: page-component-cd9895bd7-fscjk Total loading time: 0 Render date: 2024-12-27T21:41:58.018Z Has data issue: false hasContentIssue false
  • English
  • Français

What Macroeconomic Measures Are Needed for Free Trade to Flourish in the Western Hemisphere?

Published online by Cambridge University Press:  02 January 2018

Barry Eichengreen
Get access Rights & Permissions [Opens in a new window]

Abstract

Recent experience has made clear the importance of macroeconomic stability, and exchange rate stability in particular, in generating support for regional integration. The tensions created by exchange-rate and financial volatility are clearly evident in the recent history of Mercosur and may also hinder the development of a Free Trade Area of the Americas. This essay argues that ambitious schemes for a single regional currency are not a practical response to this problem. Nor would a system of currency pegs or bands be sufficiently durable to provide a lasting solution. Instead, countries must solve this problem at home. In practice, this means adopting sound and stable monetary policies backed by a clear and coherent operating strategy, such as inflation targeting. With such policies in place, exchange rate volatility can be reduced to levels compatible with regional integration.

Type
Research Article
Information
Latin American Politics and Society , Volume 46 , Issue 2 , Summer 2004 , pp. 1 - 27
Copyright
Copyright © University of Miami 2004

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Alberola, Enrique, Ana, Buisan, and de Lis, Santiago Fernández 2002. The Quest for Nominal and Real Convergence through Integration in Europe and Latin America. Working Paper no. 2013. Madrid; Banco de España.Google Scholar
Arteta, Carlos. 2002. Dollarization of Banking, Financial Stability, and Financial Liberalization. Ph.D. diss., University of California, Berkeley.Google Scholar
Bayoumi, Tamim, and Barry, Eichengreen. 1999. Is Asia an Optimum Currency Area? Could It Become One? Regional, Global and Historical Perspectives on Asian Monetary Relations. In Exchange Rate Policies in Emerging Asian Countries, ed. Stefan, Collignon, Jean, Pisani-Ferry, and Yung Chul, Park. London: Routledge. 347–67.Google Scholar
Bogdanski, Joel, de Paulo Springer, Freitas, Ilan, Goldfajn, and Alexandre Antonio, Tombini. 2001. Inflation Targeting in Brazil: Shocks, Backward-looking Prices, and IMF Conditionality. Working Paper no. 110 (November). Santiago: Central Bank of Chile.Google Scholar
Bordo, Michael, Barry, Eichengreen, Daniela, Klingebiel, and Soledad María, Martínez-Peria. 2002. Is the Crisis Problem Growing More Severe Economic Policy 32: 51–82.Google Scholar
Buiter, Willem. 1999. The EMU and the NAMU: What Is the Case for North American Monetary Union? CEPR Discussion Paper no. 2181. London: Centre for Economic Policy Research.Google Scholar
Courchene, Thomas J., and Richard, Harris. 1999. From Fixing to Monetary Union: Options for North American Currency Integration. Toronto: C. D. Howe Institute.Google Scholar
Eichengreen, Barry. 2001. Can Emerging Markets Float? Should They Inflation Target? Unpublished mss. University of California, Berkeley.Google Scholar
Eichengreen, Barry. 2002. The EMS Crisis in Retrospect. In Stabilization and Monetary Policy: The International Experience. Mexico City: Bank of Mexico. 261–308.Google Scholar
Eichengreen, Barry, and Alan, Taylor. 2003. The Macroeconomic Consequences of a Free Trade Area of the Americas. NBER Working Paper no. 9666 (May). Cambridge, MA: National Bureau of Economic Research.Google Scholar
Eichengreen, Barry, Paul, Masson, Miguel, Savastano, and Sunil, Sharma. 1999. Transition Strategies and Nominal Anchors on the Road to Greater Exchange Rate Flexibility. Princeton Studies in International Finance no. 213. Princeton: International Finance Section, Department of Economics, Princeton University.Google Scholar
Fernández-Arias, Eduardo, Ugo, Panizza, and Ernesto, Stein. 2002. Trade Agreements, Exchange Rate Disagreements. Unpublished mss. Washington, Dc: Interamerican Development Bank.Google Scholar
FitsGerald, Valpy. 2000. The Winner's Curse: Premature Monetary Integration in the NAFTA. Queen Elizabeth House Working Paper no. 63 (December). London: Queen Elizabeth House.Google Scholar
Fraga, Arminio, Ilan, Goldfajn, and Andre, Minella. 2003. Inflation Targeting in Emerging Market Economies. Nber Working Paper no. 10019 (October).Google Scholar
France, Government of, and Government of Japan. 2000. Exchange Rate Regimes for Emerging Market Economies. Website, sponsored by Japanese Ministry of Finance, <http://www.mof.go.jpenglishasemaseme03e.htm>..>Google Scholar
García Herrero, Alicia, and Gabriel, Glockler. 2000. Options for Latin America in a Globalised World: a Regional Monetary Union versus Dollarization. Unpublished mss. Frankfurt: European Central Bank.Google Scholar
Giambiagi, Fabio. 1997. Uma proposta de unificação monetária dos países do Mercosul. Revista de Economia Política 17 (October–November): 5–30.Google Scholar
Giambiagi, Fabio. 1998. Moeda única do Mercosul: notas para o debate. Revista Brasileira de Politica Internacional 41: 24–39.CrossRefGoogle Scholar
Glick, Reuven, and Michael, Hutchinson. 2000. Stopping “Hot Money” or Signaling Bad Policy? Capital Controls and the Onset of Currency Crises. Unpublished mss. San Francisco: Federal Reserve Bank of San Francisco/University of California, Santa Cruz.Google Scholar
Goldstein, Morris. 2002. Managed Floating Plus. Washington, DC: Institute for International Economics.Google Scholar
Grubel, Herbert. 2002. The Economics and Politics of a North American Monetary Union. Unpublished mss. Burnaby, Bc: Simon Fraser University.Google Scholar
Hall, Kevin G. 2003. Brazil, Argentina Plan Trade Bloc. San Jose [Ca] Mercury-News, June 12. <http://www.siliconvalley.commldmercurynewsnewsworld607037>..>Google Scholar
Helleiner, Eric. 2001. Toward a North American Currency? Trent International Political Economy Center Working Paper no. 01/09.Google Scholar
Helliwell, John. 1999. National Borders, Trade, and Migration. Nber Working Paper no. 6037.Google Scholar
Leblang, David. 1997. Are Capital Controls Obsolete? Evidence from the Developed and Developing World. International Studies Quarterly 41: 435–54.CrossRefGoogle Scholar
Mercosur. Grupo de Monitoreo Macroeconomico (GMM). 2003. Website. <http:gmm.mecon.gov.ar>..>Google Scholar
Mishkin, Frederic, and Klaus, Schmidt-Hebbel. 2001. One Decade of Inflation Targeting in the World: What Do We Know and What Do We Need to Know? Nber Working Paper no. 8397.Google Scholar
Morande, Felipe. 2001. A Decade of Inflation Targeting in Chile: Developments, Lessons, and Challenges. Santiago: Central Bank of Chile Working Paper no. 115 (November).Google Scholar
Murray, John, and James, Powell. 2002. Dollarization in Canada (the Buck Stops There). Unpublished mss. Ottawa: Bank of Canada.Google Scholar
National Post (Canada). 1999. The Maple Leaf Forever. June 24. <http://www.nationalpost.comcommentary.asp> ?s2=editorials&f=990624/12522.html.+?s2=editorials&f=990624/12522.html.>Google Scholar
Ocampo, José António. 2001. Recasting the International Financial Agenda. G24 Discussion Paper no. 13 (July). Cambridge: United Nations Conference on Trade and Development/Harvard University Center for International Development.Google Scholar
Prasad, Eswar, Kenneth, Rogoff, Shang-Jin, Wei, and Ayhan Kose, M.. 2003. Effects of Financial Globalization on Developing Countries: Some Empirical Evidence. Unpublished mss. Washington, Dc: International Monetary Fund.Google Scholar