External vulnerabilities and economic integration. Is the Union of South American Nations a promising project?

Produced by: 
Université de Lyon
Available from: 
February 2014
Paper author(s): 
Andrea Bonilla Bolaños (Université de Lyon)
Globalization and Trade
Macroeconomics and Monetary Policy

This article addresses the reactions of the Union of South American Nations (UNASUR) economies to external shocks. Unlike the existing economic integration projects, the UNASUR was conceived as a political alliance. Because the recent euro debt crisis confirmed the importance of political agreement for economic integration, the South American plan is likely to be promising. However, economic and political aspects must go hand in hand for an integration project to succeed. Thus, assessing the UNASUR from an economic perspective is essential. Using a structural vector autoregression (SVAR) approach, this paper measures the impact of three external shocks (monetary,commercial and financial) in the real, monetary and fiscal economic sector of seven UNASUR economies, Argentina, Bolivia, Brazil, Chile, Colombia, Peru and Venezuela, and detects for co-movement paths. The results reveal a non-negligible current synchronization level across the studied economies, confirm their high external vulnerability and identify mutual weaknesses to overcome.


Research section: 
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