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Breaking Badly: The Currency Union Effect on Trade

Douglas Campbell () and Aleksandr Chentsov ()
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Aleksandr Chentsov: New Economic School

No w0265, Working Papers from New Economic School (NES)

Abstract: As several European countries debate entering, or exiting, the euro, a key policy question is how much currency unions (CUs) affect trade. Recently, Glick and Rose (2016) estimated that CUs increase trade on average by 100%, and that the euro has increased trade by 50%. In this paper, we find that other major geopolitical events correlated with CU switches drive the large estimated impact of CUs on trade. We find that these estimates are sensitive to intuitive controls and to dynamic specifications. Overall, we estimate that the impact of CUs on trade is often indistinct from zero, depending on the specification and controls.

Keywords: Euro; Currency Union Effect; Gravity Estimation (search for similar items in EconPapers)
JEL-codes: F15 F33 F54 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2020-06
New Economics Papers: this item is included in nep-eec, nep-int and nep-mon
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https://www.nes.ru/files/Preprints-resh/WP265.pdf (application/pdf)

Related works:
Working Paper: Breaking Badly: The Currency Union Effect on Trade (2017) Downloads
Working Paper: Breaking Badly: The Currency Union Effect on Trade (2017) Downloads
Working Paper: Breaking Badly: The Currency Union Effect on Trade (2017) Downloads
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