Till Geography Do Us Part? Prolegomena to an Economic and Monetary Union between the Dominican Republic and Haiti

This paper offers a preliminary assessment of the potential benefits and costs of an economic and monetary union (EMU) between the Dominican Republic and Haiti -- two countries sharing the same island but whose history is one of conflict and diverg...

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Bibliographic Details
Main Author:	Moreira, Emmanuel Pinto
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ADJUSTMENT MECHANISM ADVERSE SHOCKS AGGREGATE DEMAND ARBITRAGE BANK CREDIT BILATERAL EXCHANGE RATE BILATERAL EXCHANGE RATES BILATERAL TRADE BUFFER BUSINESS CYCLE BUSINESS CYCLES CAPITAL FLOWS CAPITAL MARKETS CAPITAL MOBILITY CENTRAL BANK CLARITY COLONIALISM COMMERCIAL BANKS COMMODITY COMMODITY EXPORT COMMODITY PRICES COMMON CURRENCY COMMON CURRENCY AREA COMMON MARKET COMMUNICATIONS COMPETITION COMPETITION POLICY COMPETITIVENESS CONSOLIDATION CONSUMER GOODS CONSUMER PRICE INDEX CONSUMER PRICE INFLATION CONSUMPTION CONTROL VARIABLES CORRELATION COEFFICIENT CORRELATION COEFFICIENTS CREDIBILITY CURRENCIES CURRENCY CURRENCY RISK CURRENCY UNION CURRENCY UNIONS CUSTOMS UNION CYCLICAL FLUCTUATIONS DEFICITS DEMAND DEPRECIATION DEPRESSION DEVALUATION DEVELOPING COUNTRIES DIFFERENT CURRENCIES DISCRETIONARY POLICY DISTORTIONS DOMESTIC CAPITAL MARKETS DOMESTIC CURRENCY DOMESTIC INFLATION DOMESTIC INTEREST RATES DOMESTIC-CURRENCY DUMMY VARIABLES ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC PERFORMANCE ECONOMIC POLICIES ECONOMIC SHOCKS ECONOMIES ECONOMY ENDOGENOUS VARIABLE ENDOGENOUS VARIABLES EURO ZONE EXCHANGE RATE EXCHANGE RATE FLEXIBILITY EXCHANGE RATE MOVEMENTS EXCHANGE RATE RISK EXCHANGE RATE STABILITY EXCHANGE RATE UNCERTAINTY EXCHANGE RATE VARIABILITY EXCHANGE RATE VOLATILITY EXCHANGE-RATE EXCHANGES EXOGENOUS VARIABLE EXOGENOUS VARIABLES EXPORT MARKET EXPOSURE EXTERNAL FACTORS EXTERNAL SHOCK EXTERNAL SHOCKS EXTERNAL TRADE FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INTEGRATION FINANCIAL MARKETS FINANCIAL SUPPORT FINANCIAL TRANSACTIONS FINANCIAL VARIABLES FISCAL BALANCE FISCAL DEFICIT FISCAL POLICIES FISCAL POLICY FIXED EXCHANGE RATE FIXED EXCHANGE RATES FLEXIBLE EXCHANGE RATE FLEXIBLE EXCHANGE RATES FOREIGN CURRENCIES FOREIGN CURRENCY FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FORWARD CONTRACTS FRANC ZONE FREE TRADE FREE TRADE AREA HARMONIZATION IMPORT IMPORTS INCOME INDEPENDENT MONETARY POLICY INDUSTRIAL COUNTRIES INFLATION INFLATION DIFFERENTIAL INFLATION DIFFERENTIALS INFLATION EXPECTATIONS INFLATION RATE INFLATION RATES INFLATION TARGETING INFLATION TARGETING REGIME INTEREST INTERNATIONAL FINANCIAL STATISTICS INVESTMENT EXPENDITURE INVESTMENTS LABOR MARKET MACROECONOMIC ADJUSTMENT MACROECONOMIC POLICY MACROECONOMIC STABILITY MACROECONOMIC VARIABLES MAJOR CURRENCIES MONETARY AUTHORITIES MONETARY AUTHORITY MONETARY INDEPENDENCE MONETARY POLICIES MONETARY POLICY MONETARY POLICY AUTONOMY MONETARY POLICY INDEPENDENCE MONETARY UNION MONETARY UNIONS MONEY NARROW BANDS NATIONAL CURRENCY NATURAL RESOURCES NOMINAL ANCHOR NOMINAL DEPRECIATION NOMINAL DEPRECIATIONS NOMINAL EXCHANGE RATE NOMINAL WAGE NOMINAL WAGES OIL IMPORTERS OIL PRICE OIL PRICES OPTIMUM CURRENCY AREAS OUTPUT OUTPUT GAP OUTPUT GAPS POLITICAL INSTABILITY POLITICAL REGIME POSITIVE SPILLOVERS POVERTY REDUCTION PREFERENTIAL ACCESS PRICE FLEXIBILITY PRICE INDEX PRICE OF OIL PRICE STABILITY PRIVATE INVESTMENT PRODUCTION STRUCTURES PUBLIC DEBT QUOTAS RATE OF INFLATION REAL APPRECIATION REAL DEPRECIATION REAL EFFECTIVE EXCHANGE RATE REAL EXCHANGE RATE REAL EXCHANGE RATES REAL INTEREST RATE RELATIVE PRICE REMITTANCE REMITTANCES RESPONSE TO SHOCKS RETAIL PRICE RISK PREMIUM SHARE SINGLE CURRENCY SINGLE MARKET SOVEREIGNTY STABLE INFLATION STRONG NOMINAL ANCHOR STRUCTURAL SHOCKS SUPPLY SUPPLY SHOCKS SURPLUSES TARIFF BARRIERS TARIFF POLICY TECHNICAL ASSISTANCE TRADE INTEGRATION TRADE POLICY TRADE SHOCKS TRADE STATISTICS TRADING PARTNER TRANSACTION COSTS TRANSACTIONS COSTS TRANSMISSION MECHANISM TREASURY BILL VARIANCE-COVARIANCE MATRIX WELFARE WORLD PRICE
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100317141318 http://hdl.handle.net/10986/3728

Description
Summary:	This paper offers a preliminary assessment of the potential benefits and costs of an economic and monetary union (EMU) between the Dominican Republic and Haiti -- two countries sharing the same island but whose history is one of conflict and divergent economic prospects in recent decades. After a brief review of the historical context, it examines the nature of these potential benefits and costs. It then conducts a preliminary analysis (using basic statistical techniques) of some key criteria for the formation of an economic and monetary union between the two countries. A more formal analysis of business cycle synchronization, based on basic and extended integrated vector auto-regression models with exogenous variables (VARX), is developed next. Overall, the analysis suggests that at this stage several economic criteria are not satisfied for the two countries to fully benefit from an economic and monetary union. At the same time, however, the endogeneity of most of these criteria (including the degree of business cycle synchronization) militates in favor of an aggressive medium-term agenda for integration between them.

Till Geography Do Us Part? Prolegomena to an Economic and Monetary Union between the Dominican Republic and Haiti

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