Dollarization has been suggested as a policy that might, among other goals, promote trade between a country adopting the dollar and the United States. Evidence supporting this conjecture could be drawn from a recent series of papers by Rose and co-authors who show that a currency union increases bilateral trade among its members, and that this effect is both large and statistically significant. In this paper we show that this result is not robust if we consider bilateral United States trade (even though the United States accounts for 60 percent of all observations of currency unions between industrial and non-industrial countries), nor if we consider bilateral trade of countries that have adopted the United States dollar, like Panama. Furthermore, the effect of dollarization on trade with the United States is not statistically distinct from the effect of a fixed dollar exchange rate on trade with the United States.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
8879.
Length: Date of creation: Apr 2002 Date of revision: Handle: RePEc:nbr:nberwo:8879
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Alberto Alesina & Robert J. Barro, 2000.
"Currency Unions,"
NBER Working Papers
7927, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Alberto Alesina & Robert J. Barro & Silvana Tenreyro, 2003.
"Optimal Currency Areas,"
NBER Chapters,
in: NBER Macroeconomics Annual 2002, Volume 17, pages 301-356
National Bureau of Economic Research, Inc.
[Downloadable!]
Other versions:
Alberto Alesina & Robert J. Barro & Silvana Tenreyro, 2002.
"Optimal Currency Areas,"
NBER Working Papers
9072, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)