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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Paper provided by Free University Berlin, School of Business & Economics in its series Discussion Papers with number
2005/9.
Find related papers by JEL classification: F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General F14 - International Economics - - Trade - - - Country and Industry Studies of Trade F15 - International Economics - - Trade - - - Economic Integration F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
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