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The Impact of Monetary Regimes on International Trade

Author

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  • Apanard Penny Angkinand

    (Apanard Penny Angkinand, The Milken Institute and the University of Illinois at Springfield. E-mail: pangkinand@milkeninstitute.org)

  • Clas Wihlborg

    (Clas Wihlborg, Argyros School of Business and Economics, Chapman University. E-mail: wihlborg@chapman.edu)

Abstract

We extend much research that has been devoted to the effects of the European Monetary Union (EMU) on international trade by introducing monetary regime variables in bilateral export equations with the objective of capturing the effects on trade of changes in monetary regimes relative to the pure EMU effects. To make the analysis relevant from an Asian perspective trade effects of the EU’s internal markets are also separated from EMU effects. To identify these different effects we include three groups of countries in our sample: EMU countries which are also members of the EU, EU countries outside the EMU and non-EU countries. The last control group consists of either non-EU industrial countries or non-EU industrial plus emerging market countries. Asian experiences with inflation targeting are discussed and compared to the empirical results we obtain for trade effects of monetary regimes. Even if deeper monetary integration leads to greater trade expansion, it involves political complexity. The choice of an appropriate monetary regime can be a relatively simple unilateral tool for expanding trade.

Suggested Citation

  • Apanard Penny Angkinand & Clas Wihlborg, 2010. "The Impact of Monetary Regimes on International Trade," Review of Market Integration, India Development Foundation, vol. 2(2-3), pages 255-290, August.
    • Handle: RePEc:sae:revmar:v:2:y:2010:i:2-3:p:255-290
    DOI: 10.1177/097492921000200304
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    References listed on IDEAS

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