This paper attempts to evaluate whether the set of NAFTA countries (the U.S., Canada and Mexico) should adopt the same currency. The theoretical basis for the paper is the optimal currency area theory which suggests that countries or regions that experience similar business cycles can gain advantages in adopting the same currency. The statistical methodology used in the paper to evaluate whether states or provinces have similar business cycle correlations is model-based cluster analysis, a recently-developed method to group data in the applied statistics literature.
Crowley, P.M. (2004), "A SINGLE CURRENCY FOR NAFTA?", Rugman, A.M. (Ed.) North American Economic and Financial Integration (Research in Global Strategic Management, Vol. 10), Emerald Group Publishing Limited, Bingley, pp. 153-173. https://doi.org/10.1016/S1064-4857(04)10009-0
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