MAS Occasional Paper No. 22, Aug 2002

The Effects of Common Currencies on International Trade: Where Do We Stand?

By Professor Andrew K Rose, HAAS School of Business, University of California, Berkeley.  This paper was prepared while Professor Rose was visiting the Economics Department, MAS, in August 2002.

Abstract

Twenty-four recent studies have investigated the effect of currency union on trade, resulting in 443 point estimates of the effect.  This paper is a quantitative attempt to summarize the current state of debate; meta-analysis is used to combine the disparate estimates.  The chief findings are that: (a) the hypothesis that there is no effect of currency union on trade can be rejected at standard significance levels; (b) the combined estimate implies that currency union approximately doubles trade; and (c) the estimates are heterogeneous and not consistently tied to features of the studies. 

This paper can be downloaded in PDF format  (PDF, 773KB)

and can be viewed and printed with Adobe's Acrobat^(TM) Reader