Monetary union and productivity differences in Mercosur countries

Abstract This paper investigates cross-country productivity convergence among Mercosur members plus associates (Chile and Bolivia) and Peru, during the period 1960–1999. The testing strategy is based on the definitions of time series convergence by Bernard and Durlauf (1995) [Bernard, A. B., & Durlauf, S. N. (1995). Interpreting tests of convergence hypothesis. Journal of Econometrics , 71 , 161–173] and applies sequentially the multivariate unit root tests proposed by Sarno and Taylor (1998) [Sarno, L., & Taylor, M. (1998). Real exchange rates under the recent float: Unequivocal evidence of mean reversion. Economics Letters , 60 , 131–137], Flores et al. (1995) [Flores, R., Preumont, P.Y.,…