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Breaking Badly: The Currency Union Effect on Trade

Author

Listed:
  • Douglas L. Campbell

    (New Economic School)

  • Aleksandr Chentsov

    (New Economic School)

Abstract

As several European countries debate entering, or exiting, the euro, a key policy question is how much currency unions (CUs) affect trade. Despite the longstanding academic debate on the topic, even recent research has continued to find that CUs exert a large effect on trade. We find, by contrast, that the sizeable recent estimated impact of CUs on trade is driven by other major geopolitical events and is also sensitive to dynamic controls. Overall, we estimate that the impact of CUs on trade is typically indistinct from zero, depending on the specification and controls, but with fairly large standard errors.

Suggested Citation

  • Douglas L. Campbell & Aleksandr Chentsov, 2021. "Breaking Badly: The Currency Union Effect on Trade," Working Papers w0281, New Economic School (NES).
    • Handle: RePEc:abo:neswpt:w0281
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    File URL: https://www.nes.ru/files/Preprints-resh/WP281.pdf
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    References listed on IDEAS

    as
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Saga Continues: A New Addition to the Currency Unions and Trade Literature
      by Doug Campbell in Douglas L. Campbell on 2017-07-30 18:35:00

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    Cited by:

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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F54 - International Economics - - International Relations, National Security, and International Political Economy - - - Colonialism; Imperialism; Postcolonialism

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