The euro's trade effect

Richard Baldwin

No 594, Working Paper Series from European Central Bank

Abstract: This paper reviews reassesses the methodology and principal findings of the “Rose effect”, i.e. the trade effects of currency union, looking at both EMU and non-EMU currency unions. The consensus estimate suggests that the euro has already boosted intra-euro area trade by five to ten percent. The paper discusses a gamut of models that might explain the Rose effect in Europe and suggests a series of empirical test that could help identify the economic mechanisms involved. JEL Classification: F12; C33; E0.

Keywords: Rose effect; exchange rate volatility; monetary union; gravity model. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba and nep-mac
Date: 2006-03
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