Economic integration in Central America and the Caribbean

The costliness of economic integration is partly dependent upon whether shocks to regions or groups of nations are symmetric or asymmetric in their impacts. This paper uses a structural vector autoregressive model to determine whether exogenous shocks have symmetric or asymmetric effects for a group of Caribbean and Central American nations. The results indicate that there are likely to be significant costs to extensive economic integration in these regions. There is support for integration encompassing limited combinations of countries.