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Currency union entries and trade

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  • Nitsch, Volker

Abstract

Recent research suggests that adopting a common currency increases bilateral trade. In this paper, I explore experiences of currency union entry in the post-war period and find no effect on trade. Previous results derived from a large panel data set (covering more than 200 countries from 1948 through 1997) appear to depend crucially on the assumption of symmetry between currency union exits and entries: While countries leaving a currency union experience significant declines in trade, currency union entry appears to have no measurable effect on trade. Also, in a detailed analysis of the enlargement of the CFA franc zone, I find no consistent results on changes in the pattern of trade. --

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Bibliographic Info

Paper provided by Free University Berlin, School of Business & Economics in its series Discussion Papers with number 2005/9.

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Date of creation: 2005
Date of revision:
Handle: RePEc:zbw:fubsbe:20059

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Related research

Keywords: accession; adoption; common currency; monetary integration;

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References

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  1. Berger, Helge & Nitsch, Volker, 2005. "Zooming Out: The Trade Effect of the EURO in Historical Perspective," Discussion Papers 2005/5, Free University Berlin, School of Business & Economics.
  2. Alejandro Micco & Ernesto Stein & Guillermo OrdoÒez, 2003. "The currency union effect on trade: early evidence from EMU," Economic Policy, CEPR & CES & MSH, vol. 18(37), pages 315-356, October.
  3. Andrew K. Rose, 2000. "One money, one market: the effect of common currencies on trade," Economic Policy, CEPR & CES & MSH, vol. 15(30), pages 7-46, 04.
  4. Thom, Rodney & Walsh, Brendan, 2002. "The effect of a currency union on trade: Lessons from the Irish experience," European Economic Review, Elsevier, vol. 46(6), pages 1111-1123, June.
  5. Torsten Persson, 2001. "Currency unions and trade: how large is the treatment effect?," Economic Policy, CEPR & CES & MSH, vol. 16(33), pages 433-462, October.
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Citations

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Cited by:
  1. Wolf, Nikolaus, 2005. "Endowments vs market potential: what explains the relocation of industry after the Polish reunification 1918?," Discussion Papers 2005/18, Free University Berlin, School of Business & Economics.
  2. Richard Pomfret, 2004. "Sequencing Trade and Monetary Integration: Issues and Applications to Asia," School of Economics Working Papers 2004-14, University of Adelaide, School of Economics.
  3. Bester, Helmut, 2005. "Externalities, Communication and the Allocation of Decision Rights," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 69, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  4. Bitzer, Jurgen & Geishecker, Ingo, 2006. "What drives trade-related R&D spillovers? Decomposing knowledge-diffusing trade flows," Economics Letters, Elsevier, vol. 93(1), pages 52-57, October.
  5. Koulovatianos, Christos & Schröder, Carsten & Schmidt, Ulrich, 2005. "Non-market time and household well-being," Discussion Papers 2005/11, Free University Berlin, School of Business & Economics.
  6. Helge Berger & Volker Nitsch, 2005. "Zooming Out: The Trade Effect of the Euro in Historical Perspective," CESifo Working Paper Series 1435, CESifo Group Munich.
  7. Campbell, Douglas L., 2011. "Estimating the impact of currency unions on trade using a dynamic gravity framework," MPRA Paper 35531, University Library of Munich, Germany.
  8. Tommaso Mancini Griffoli, 2006. "Explaining the Euro's Effect on Trade? Interest Rates in an Augmented Gravity Equation," IHEID Working Papers 10-2006, Economics Section, The Graduate Institute of International Studies.
  9. Tommaso Mancini-Griffoli & Laurent L. Pauwels, 2006. "Is There a Euro Effect on Trade? An Application of End-of-Sample Structural Break Tests for Panel Data," IHEID Working Papers 04-2006, Economics Section, The Graduate Institute of International Studies, revised Apr 2006.
  10. Richard Pomfret, 2005. "Sequencing Trade and Monetary Integration," Others 0502004, EconWPA.

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