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Asymmetric Effect of Currency Union for Developing Countries

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  • Ayako Saiki

Abstract

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

Suggested Citation

  • Ayako Saiki, 2005. "Asymmetric Effect of Currency Union for Developing Countries," Open Economies Review, Springer, vol. 16(3), pages 227-247, July.
    • Handle: RePEc:kap:openec:v:16:y:2005:i:3:p:227-247
    DOI: 10.1007/s11079-005-1023-1
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    4. Stefan Eichler & Alexander Karmann, 2011. "Optimum Currency Areas in Emerging Market Regions: Evidence Based on the Symmetry of Economic Shocks," Open Economies Review, Springer, vol. 22(5), pages 935-954, November.
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    currency union; gravity model;

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