Revisiting Rose’s common currency debate

Maria Santana-Gallego (), Francisco Ledesma () and Jorge Pérez-Rodríguez ()
Additional contact information
Maria Santana-Gallego: Universidad de La Laguna

No 10-02, Working Papers from Asociación Española de Economía y Finanzas Internacionales

Abstract: The main objective of this research is to revisit the estimation of the effect of a common currency on international trade by applying the new methodology proposed by Helpman, Melitz and Rubistein (2008) and incorporating tourism to the theoretical framework. Rose (2000) estimates an empirical model of bilateral trade, finding a significant coefficient for a currency union variable of 1.2, suggesting an effect of currency unions on trade of over a 200%. Rose (2000)´s finding did not receive full acceptance and further research was consequently devoted to find reasons of such high effect. This still remains as a major puzzle in the International Economics. Rose and Van Wincoop (2001) hold that there may still be some omitted factors that drives countries to both participate in currency unions and trade more. In this research a gravity equation for trade is estimated controlling by international tourism.

Keywords: Currency unions; international trade; tourism; gravity equations (search for similar items in EconPapers)
JEL-codes: F10 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2010-02
New Economics Papers: this item is included in nep-int, nep-mon and nep-tur
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.aeefi.com/RePEc/pdf/defi10-02.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aee:wpaper:1002

Access Statistics for this paper

More papers in Working Papers from Asociación Española de Economía y Finanzas Internacionales Contact information at EDIRC.
Bibliographic data for series maintained by Luis Miguel del Corral Cuervo ().