Three essays on North American monetary union

This thesis has studied the issue of monetary union between the United States, Canada and Mexico and is the first of its kind in terms of scope in the literature. Essay 1 has uncovered the nature of shocks that affect the United States and Canada by modeling each economy according to their relative degree of openness to international trade. Essay 2 has carried out a similar task for Mexico and Canada and for Mexico and the United States. On a pairwise comparison basis, these two first essays have shed light on how the three economies evolve over time as they are hit by a once-and-for-all shock, which is a prerequisite for any group of countries that envisage a monetary union in the spirit of Mundell (1961). The first two essays implicitly differentiate interaction between economies of relatively the same degree of economic development (United States and Canada) and between less developed and advanced nations (Mexico-U.S., Mexico-Canada). Based on Data taken from different sources that extends over the last four decades, these two essays have shown that shocks that affect Canada and the United States are symmetric in nature and therefore a monetary union is feasible between the two, if such a decision could solely be based on this criterion. As to the possibility of a monetary union between Mexico and Canada and Mexico and United States, there is no clear cut. The degree of shocks asymmetry or symmetry could not be established because the result depends on the order of integration of Mexico's money stock.;This essay has fulfilled two important tasks: (a) it has brought robustness to the findings of Essays 1 and 2, and (b) it has offered an alternative way to assess the feasibility of monetary union on the basis of business cycle symmetry or asymmetry.;In few words, this thesis has demonstrated that independently of the technique used, the result is the same: Canada and the United States are most suitable for a monetary union. However, if we have to take into consideration the fact that Mexico's economy appears to be moving closer to fulfilling the optimum currency areas criteria, as found in Essay 3 and documented in Christ (2000), the three countries are suitable for a monetary union. (Abstract shortened by UMI.).