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The Effect of a Common Currency on Trade - Ireland before and after the Sterling Link

  • Rodney Thom

    (University College Dublin)

  • Brendan Walsh

    (University College Dublin)

This paper uses the introduction of an exchange rate between Ireland and the UK in 1979 as a natural experiment to shed light on the effects of a common currency on the volume of international trade. No evidence is found from time series or panel regressions that the change of exchange rate regime had a significant effect on the pattern of Irish trade. This finding casts doubt on the belief that the European Economic and Monetary Union will have a major effect on the pattern of trade between participating countries.

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File URL: http://www.ucd.ie/economics/research/papers/2001/WP01.10.pdf
File Function: First version, 2001
Download Restriction: no

Paper provided by School Of Economics, University College Dublin in its series Working Papers with number 200110.

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Length: 32 pages
Date of creation: 11 May 2001
Date of revision:
Handle: RePEc:ucn:wpaper:200110
Contact details of provider: Postal: UCD, Belfield, Dublin 4
Phone: +353-1-7067777
Fax: +353-1-283 0068
Web page: http://www.ucd.ie/economics

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  1. James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics 485, Boston College Department of Economics.
  2. Cotter, John, 2000. "Volatility and the Euro: an Irish perspective," MPRA Paper 3535, University Library of Munich, Germany.
  3. Marc Flandreau, 2001. "The Bank, the States, and the Market: an Austro-Hungarian Tale for Euroland, 1867-1914," Sciences Po publications n°43, Sciences Po.
  4. Giovanni Dell'Ariccia, 1999. "Exchange Rate Fluctuations and Trade Flows: Evidence from the European Union," IMF Staff Papers, Palgrave Macmillan, vol. 46(3), pages 5.
  5. Frankel, Jeffrey A & Rose, Andrew K, 2000. "An Estimate of the Effect of Currency Unions on Trade and Output," CEPR Discussion Papers 2631, C.E.P.R. Discussion Papers.
  6. Robert C. Feenstra & Robert E. Lipsey & Harry P. Bowen, 1997. "World Trade Flows, 1970-1992, with Production and Tariff Data," NBER Working Papers 5910, National Bureau of Economic Research, Inc.
  7. Neary, J.P. & Thom, D.R., 1996. "Punts, Pounds and Euros: In Search of an Optimum Currency Area," Papers 96/24, College Dublin, Department of Political Economy-.
  8. Lothian, James R. & Taylor, Mark P., 1997. "Real exchange rate behavior," Journal of International Money and Finance, Elsevier, vol. 16(6), pages 945-954, December.
  9. Rose, Andrew, 1999. "One Money, One Market: Estimating the Effect of Common Currencies on Trade," Seminar Papers 678, Stockholm University, Institute for International Economic Studies.
  10. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
  11. Edgar Morgenroth, 2000. "Exchange rates and trade: the case of Irish exports to Britain," Applied Economics, Taylor & Francis Journals, vol. 32(1), pages 107-110.
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