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Asymmetric Effect of Currency Union for Developing Countries

  • Ayako Saiki


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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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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