IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/21535.html
   My bibliography  Save this paper

Currency Unions and Trade: A Post-EMU Mea Culpa

Author

Listed:
  • Reuven Glick
  • Andrew K. Rose

Abstract

In our European Economic Review (2002) paper, we used pre-1998 data on countries participating in and leaving currency unions to estimate the effect of currency unions on trade using (then-) conventional gravity models. In this paper, we use a variety of empirical gravity models to estimate the currency union effect on trade and exports, using recent data which includes the European Economic and Monetary Union (EMU). We have three findings. First, our assumption of symmetry between the effects of entering and leaving a currency union seems reasonable in the data but is uninteresting. Second, EMU typically has a smaller trade effect than other currency unions; it has a mildly stimulating effect at best. Third and most importantly, estimates of the currency union effect on trade are sensitive to the exact econometric methodology; the lack of consistent and robust evidence undermines confidence in our ability to reliably estimate the effect of currency union on trade.

Suggested Citation

  • Reuven Glick & Andrew K. Rose, 2015. "Currency Unions and Trade: A Post-EMU Mea Culpa," NBER Working Papers 21535, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:21535
    Note: IFM ITI
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w21535.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. de Sousa, José, 2012. "The currency union effect on trade is decreasing over time," Economics Letters, Elsevier, vol. 117(3), pages 917-920.
    2. Gopinath, G. & Helpman, . & Rogoff, K. (ed.), 2014. "Handbook of International Economics," Handbook of International Economics, Elsevier, edition 1, volume 4, number 4.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Álvarez, Inmaculada C. & Barbero, Javier & Rodríguez-Pose, Andrés & Zofío, José L., 2018. "Does Institutional Quality Matter for Trade? Institutional Conditions in a Sectoral Trade Framework," World Development, Elsevier, vol. 103(C), pages 72-87.
    2. Emanuel Ornelas & Marcos Ritel, 2020. "The not‐so‐generalised effects of the Generalized System of Preferences," The World Economy, Wiley Blackwell, vol. 43(7), pages 1809-1840, July.
    3. Núñez-Rocha, Thaís & Martínez-Zarzoso, Inmaculada, 2019. "Are international environmental policies effective? The case of the Rotterdam and the Stockholm Conventions," Economic Modelling, Elsevier, vol. 81(C), pages 480-502.
    4. Inmaculada Martínez-Zarzoso, 2019. "The Euro and the CFA Franc: Evidence of Sectoral Trade Effects," Open Economies Review, Springer, vol. 30(3), pages 483-504, July.
    5. Jia Hou, 2020. "Revisiting the trade effects of the euro: data sources and various samples," Empirical Economics, Springer, vol. 59(6), pages 2731-2777, December.
    6. Inmaculada Martinez-Zarzoso, 2019. "Effects of Foreign Aid on Income through International Trade," Politics and Governance, Cogitatio Press, vol. 7(2), pages 29-52.
    7. Stephan Klasen & Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann & Matthias Bruckner, 2021. "Does the designation of least developed country status promote exports?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 30(2), pages 157-177, February.
    8. Kuenzel, David J., 2017. "WTO dispute determinants," European Economic Review, Elsevier, vol. 91(C), pages 157-179.
    9. Mignamissi, Dieudonné, 2020. "The CFA Franc effect on trade," MPRA Paper 99018, University Library of Munich, Germany.
    10. Duarte, Rosa & Pinilla, Vicente & Serrano, Ana, 2019. "Long Term Drivers of Global Virtual Water Trade: A Trade Gravity Approach for 1965–2010," Ecological Economics, Elsevier, vol. 156(C), pages 318-326.
    11. Castellares, Renzo & Salas, Jorge, 2019. "Contractual imperfections and the impact of crises on trade: Evidence from industry-level data," Journal of International Economics, Elsevier, vol. 116(C), pages 33-49.
    12. Sangeeta Khorana & Inmaculada Martínez‐Zarzoso, 2020. "Twenty‐First‐Century Trade Governance: Findings From The Commonwealth Countries," Contemporary Economic Policy, Western Economic Association International, vol. 38(2), pages 380-396, April.
    13. Pierluigi Montalbano & Silvia Nenci & Laura Dell'Agostino, 2019. "A non-parametric re-assessment of the trade effects of the euro using value added data," Working Papers 9/19, Sapienza University of Rome, DISS.
    14. Pothen, Frank & Hübler, Michael, 2018. "The interaction of climate and trade policy," European Economic Review, Elsevier, vol. 107(C), pages 1-26.
    15. Mika, Alina & Zymek, Robert, 2018. "Friends without benefits? New EMU members and the “Euro Effect” on trade," Journal of International Money and Finance, Elsevier, vol. 83(C), pages 75-92.
    16. Helble, Matthias & Ngiang, Boon-Loong, 2014. "From Global Factory to Global Mall: East Asia’s Changing Trade Composition," ADBI Working Papers 496, Asian Development Bank Institute.
    17. Jules Hugot & Camilo Umana Dajud, 2016. "Trade costs and the Suez and Panama Canals," Working Papers 2016-29, CEPII research center.
    18. Jose Asturias & Manuel García-Santana & Roberto Ramos, 2019. "Competition and the Welfare Gains from Transportation Infrastructure: Evidence from the Golden Quadrilateral of India," Journal of the European Economic Association, European Economic Association, vol. 17(6), pages 1881-1940.
    19. Stephen J. Redding & David E. Weinstein, 2017. "Aggregating from Micro to Macro Patterns of Trade," NBER Working Papers 24051, National Bureau of Economic Research, Inc.
    20. Cheptea, Angela & Emlinger, Charlotte & Latouche, Karine, 2014. "Do exporting firms benefit from retail internationalization? Evidence from France," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182706, European Association of Agricultural Economists.

    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:21535. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.