Staff Papers
Published Date: 01 August 2002

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

MAS Occasional Paper No. 22, August 2002 - By Andrew K Rose


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.