Rose Effect: How Far Can it be Argued that the Euro Increased Trade?
AbstractCurrent imbalances in the euro area made it necessary to identify the benefits of a single currency in order to sustain the viability of it. This paper aims to review existing literature on the endogenous effects of monetary integration: whether sharing a single currency may bring countries closer together through an increase in trade. The first part is a review of significant paper in the vast literature on the endogeneity of optimum currency area theory that focuses on the main criterion that is subject of this hypothesis. The second part considers empirical literature on the effects of monetary integration on trade based on evidences provided by the euro area experience. The main conclusion is that the hypothesis attracted a large number of studies and, although they provide heterogeneous results caused by using different methodologies, they all indicate a positive effect.
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Bibliographic InfoArticle provided by Ovidius University of Constantza, Faculty of Economic Sciences in its journal Ovidius University Annals, Economic Sciences Series.
Volume (Year): XI (2011)
Issue (Month): 1 (May)
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Web page: http://www.univ-ovidius.ro/facultatea-de-stiinte-economice
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optimum currency areas; endogeneity; euro; Rose Effect;
Find related papers by JEL classification:
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- F15 - International Economics - - Trade - - - Economic Integration
- F3 - International Economics - - International Finance
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