EXTERNAL VULNERABILITIES AND ECONOMIC INTEGRATION: IS THE UNION OF SOUTH AMERICAN NATIONS A PROMISING PROJECT?

This study examines the reactions of the Union of South American Nations (UNASUR) economies to external shocks. By using a structural vector autoregression approach, it measures the impact of three external shocks (monetary, commercial, and financial) in the real, monetary, and fiscal economic sectors of seven UNASUR economies, namely Argentina, Bolivia, Brazil, Chile, Colombia, Peru, and Venezuela, and investigates co-movement paths. The results show a non-negligible degree of synchronization across the studied economies, confirming their high external vulnerability. They also suggest that irrespective of size or integration degree, all UNASUR members share mutual weaknesses, which they must fight to overcome.