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Estimating the impact of currency unions on trade using a dynamic gravity framework

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  • Campbell, Douglas L.

Abstract

This paper revisits the early time series estimates of currency unions on trade from an historical perspective using a dynamic gravity equation and by conducting in-depth case studies of currency union breakups. The early large estimates were driven by omitted variables, as many currency union exits were coterminous with warfare, communist takeovers, coup d'etats, genocide, bloody wars of independence, various other geopolitical travesties, or were predated by trade collapses. Static gravity estimates are found to be sensitive to controlling for these omitted variables, while a dynamic gravity specification implies that currency unions do not increase trade.

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  • Campbell, Douglas L., 2011. "Estimating the impact of currency unions on trade using a dynamic gravity framework," MPRA Paper 35531, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:35531
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    1. Currency unions and trade
      by Economic Logician in Economic Logic on 2012-03-21 18:58:00

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    1. Meriem Bouchoucha, 2015. "The Euro Effect on Eurozone Exports," International Economic Journal, Taylor & Francis Journals, vol. 29(3), pages 399-418, September.

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    More about this item

    Keywords

    Currency Unions; Trade; Dynamic Gravity; Decolonization;
    All these keywords.

    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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