Trade diversion in a currency union
AbstractThis paper examines the consequences of trade diversion within the framework of a three-country,n-goods, two-period model. Two of the countries form a currency union while their currency floats with regard to the one of the third country. Trade diversion here is a shift in import demand from the goods produced in the third country to those produced by the union partner. It will be shown that because of the direct demand effect and the real balance effect, trade diversion will clearly increase intertemporal welfare in both union countries. Copyright Kluwer Academic Publishers 1994
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Springer in its journal Open Economies Review.
Volume (Year): 5 (1994)
Issue (Month): 1 (March)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100323
currency union; trade diversion; customs union;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Persson, Torsten, 1982. " Global Effects of National Stabilization Policies under Fixed and Floating Exchange Rates," Scandinavian Journal of Economics, Wiley Blackwell, vol. 84(2), pages 165-92.
- Rodrik, Dani, 1987. "Trade and capital-account liberalization in a keynesian economy," Journal of International Economics, Elsevier, vol. 23(1-2), pages 113-129, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.