The purpose of this paper is to provide a closer view on the interaction of exchange rate volatility and interest rate volatility in the Mercosur countries. We discuss several models that explain systematic correlations between the movements of both variables and their second statistical...

This paper provides a closer view on the interaction of exchange rate volatility and interest rate volatility in the Mercosur countries. We discuss several models that explain systematic correlations between the movements of both variables and their secon

Evaluating the costs and benefits of exchange rate stability, requires a different approach to Mercosur than to the European Union (EU). Trade integration within Mercosur is much more limited; currencies are driven by other factors such as confidence in the ability to serve external debt and the...