Chile Currency Union

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Recommended: Critique of Demographic Transition Theory

Introduction
An optimum currency union would be a region that benefits economically from a shared economy. According to Mundell, the four criteria for a successful currency union are labor mobility, openness, a risk sharing system, and similar business cycles. In todays society the world markets are ever more in twined, trading goods and services. Having one currency would ease the integration of markets, and allow for even more trading.
Several regions around the world have been considering forming a currency union, with the Eurozone already implemented. South America, specifically Chile, could benefit from the globalization and price stability that a currency union creates. Two factors have contributed to the currency union trend: globalization and price stability (Andreea).
MERCOSUR is an economic agreement with many South American countries, and is looking to implement a currency union called the “gaucho” (Viale).
Data Section
Gathered from the CIA world fact book I created this table to get a simple comparison of neighboring countries to Chile.
Analysis
MERCOSUR economies are driven by agriculture and exports (Viale). Brazil, having the strongest economy, would be the anchor country if there were any economic shocks (Viale). According to the CIA World Fact book, Chile is in advanced stages of demographic transition and has become more attractive economically since it adopted democracy in 1990. They have a high level of foreign trade and a reputation for strong financial intuitions. They would fit the openness and similar business cycles of other
MERCOSUR countries. Like the Eurozone Chile would be part of the MERCOSUR common market, which would open their borders to labor and capital mobility (Viale).
To be fully integrated ...

... middle of paper ...

...will have to work more to operate under the common goals of forming a currency union.

References
.
Andreea, Teică Ramona. "The Economic And Monetary Union - An Optimum Currency
Area?" Young Economists Journal / Revista Tinerilor Economisti 10.20 (2013): 85-93.
Business Source Complete. Web. 29 Apr. 2014.
Central Intelligence Agency. Central Intelligence Agency, n.d. Web. 30 Apr. 2014.
.
Rose, Andrew K., and Charles Engel. "Currency Unions And International Integration."
Journal Of Money, Credit & Banking (Ohio State University Press) 34.4 (2002): 1067-
1087. Business Source Complete. Web. 29 Apr. 2014.
Viale, Ariel M., et al. "Computing And Testing A Stable Common Currency For
Mercosur Countries." Journal Of Applied Economics 11.1 (2008): 193-220. Business
Source Complete. Web. 29 Apr. 2014.

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