Does a Currency Union Affect Trade? The Time Series Evidence

Andrew Rose and Reuven Glick

No 2891, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Does leaving a currency union reduce international trade? We answer this question using a large annual panel data set covering over 230 countries from 1948-97. During this sample over one hundred pairs of countries had currency union dissolutions; they experienced economically and statistically significant declines in bilateral trade, after accounting for other factors. Assuming symmetry, we estimate that a pair of countries that starts to use a common currency experiences a doubling in bilateral trade.

Keywords: Monetary; Gravity; Empirical; International; Bilateral; Country; Common currency; Union; Fixed; Random (search for similar items in EconPapers)
JEL-codes: F15 F33 (search for similar items in EconPapers)
Date: 2001-07
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Citations: View citations in EconPapers (28)

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Journal Article: Does a currency union affect trade? The time-series evidence (2002)
Working Paper: Does a currency union affect trade? the time series evidence (2001)
Working Paper: Does a Currency Union Affect Trade? The Time Series Evidence (2001)
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