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Asymmetric Effect of Currency Union for Developing Countries

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  • Ayako Saiki

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Abstract

The large effect of currency union on trade volume has been well documented by Rose (2000). However, the effect of currency union on trade balance has hardly been previously reported. In this study, the effect of currency union is found to differ substantially across imports and exports when a developing country trade with developed country that anchors the currency. To ensure that the asymmetric effect does not come from the specific nature of countries that have adopted a common currency or endogeneity of currency union, we test the same hypothesis using nominal exchange rate volatility and real exchange rate level. Copyright Springer Science + Business Media, Inc. 2005

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File URL: http://hdl.handle.net/10.1007/s11079-005-1023-1
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Bibliographic Info

Article provided by Springer in its journal Open Economies Review.

Volume (Year): 16 (2005)
Issue (Month): 3 (July)
Pages: 227-247

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Handle: RePEc:kap:openec:v:16:y:2005:i:3:p:227-247

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Web page: http://www.springerlink.com/link.asp?id=100323

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Keywords: currency union; gravity model;

References

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Cited by:
  1. Cipollina, Maria & Salvatici, Luca, 2007. "Reciprocal trade agreements in gravity models: a meta-analysis," Economics & Statistics Discussion Papers esdp07035, University of Molise, Dept. EGSeI.
  2. Cardamone, Paola, 2007. "A survey of the assessments of the effectiveness of Preferential Trade Agreements using gravity models," Working Papers 7282, TRADEAG - Agricultural Trade Agreements.
  3. Stefan Eichler & Alexander Karmann, 2011. "Optimum Currency Areas in Emerging Market Regions: Evidence Based on the Symmetry of Economic Shocks," Open Economies Review, Springer, vol. 22(5), pages 935-954, November.

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