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Out in the cold? Iceland's trade performance outside the European Union and European Monetary Union


  • Francis Breedon
  • Thórarinn G. Pétursson


Although entering currency (and customs) unions involve both costs and benefits, an increasing body of research is finding that the benefits--in terms of international trade creation--are remarkably large. Focusing simply on the European Monetary Union (EMU) rather than the broad range of currency unions studied by other authors, we find that the trade impact of EMU is smaller, but still substantial. Our findings suggest that the Iceland's trade could increase by about 60% and that the trade-to-GDP ratio could rise by 12 percentage points should Iceland join the European Union and EMU. Copyright 2006, Oxford University Press.

Suggested Citation

  • Francis Breedon & Thórarinn G. Pétursson, 2006. "Out in the cold? Iceland's trade performance outside the European Union and European Monetary Union," Cambridge Journal of Economics, Oxford University Press, vol. 30(5), pages 723-736, September.
  • Handle: RePEc:oup:cambje:v:30:y:2006:i:5:p:723-736

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    Cited by:

    1. Bjarni G. Einarsson & Gudjón Emilsson & Svava J. Haraldsdóttir & Ólafur Ö. Klemensson & Thórarinn G. Pétursson & Rósa B. Sveinsdóttir, 2013. "The production and export structure of the Icelandic economy. An international comparison," Economics wp60, Department of Economics, Central bank of Iceland.
    2. Thórarinn G. Pétursson, 2009. "Does inflation targeting lead to excessive exchange rate volatility?," Economics wp43, Department of Economics, Central bank of Iceland.

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