Breaking badly: The currency union effect on trade

Douglas Campbell and Aleksandr Chentsov

Journal of International Money and Finance, 2023, vol. 136, issue C

Abstract: As several European countries debate entering, or exiting, the euro, a key policy question concerns how much currency unions (CUs) affect trade. Despite the longstanding academic debate on the topic, recent research has continued to find that CUs exert a large effect on trade. We find, by contrast, that the sizeable recent estimated impact of CUs on trade is driven by other major geopolitical events and is also sensitive to dynamic controls. Overall, using various specifications and controls, we estimate that the impact of CUs on trade is indistinct from zero but with relatively large standard errors.

Keywords: Euro; Currency union effect; Gravity estimation (search for similar items in EconPapers)
JEL-codes: F15 F33 F54 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Breaking Badly: The Currency Union Effect on Trade (2021)
Working Paper: Breaking Badly: The Currency Union Effect on Trade (2020)
Working Paper: Breaking Badly: The Currency Union Effect on Trade (2017)
Working Paper: Breaking Badly: The Currency Union Effect on Trade (2017)
Working Paper: Breaking Badly: The Currency Union Effect on Trade (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:136:y:2023:i:c:s0261560623000414

DOI: 10.1016/j.jimonfin.2023.102840

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