Monetary Union, Trade Integration, and Business Cycles in 19th Century Europe
AbstractThis paper studies the impact of monetary arrangements on trade integration and business cycle correlation in late 19th century Europe. We estimate a gravity model and show that tighter monetary integration was associated with substantially higher trade, as in recent studies using contemporary data. For instance, the Austro-Hungarian monetary union improved trade between member states by a factor of 3. To explain this, we build and estimate a simple model where greater monetary integration weakens the current account constraint by fostering business cycle co-movements. Copyright Springer Science + Business Media, Inc. 2005
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Bibliographic InfoArticle provided by Springer in its journal Open Economies Review.
Volume (Year): 16 (2005)
Issue (Month): 2 (April)
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Web page: http://www.springerlink.com/link.asp?id=100323
optimum currency areas; endogeneity; trade; business cycles; monetary union;
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