The Determinants Policy Convergence in Latin America and the Caribbean (original) (raw)

There have been numerous attempts at the formation of regional policy groupings within Latin America and the Caribbean (LAC). This paper analyses whether or not there has been any convergence in the macroeconomic policies pursued by member countries using realised correlation analysis and panel unit root tests of convergence for 26 LAC countries and observations covering the period 1970 to 2005. The study finds evidence of comovement in monetary, fiscal, trade and capital account policies, with the strength of association rising over time. The main determinants of the strength of comovement were similarity in economic size, economic shocks, transportation costs and population size. JEL Classification: E63; O54; C22