Does a Currency Union Affect Trade? The Time Series Evidence

Glick, Reuven; Rose, Andrew Kenan

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Does a Currency Union Affect Trade? The Time Series Evidence

NBER Working Paper No. w8396

24 Pages Posted: 20 Jul 2001 Last revised: 25 Sep 2001

See all articles by Reuven Glick

Reuven Glick

Federal Reserve Bank of San Francisco - Center for Pacific Basin Monetary & Economic Studies

Andrew Kenan Rose

University of California - Haas School of Business; NUS Business School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

There are 2 versions of this paper

Date Written: July 2001

Abstract

Does leaving a currency union reduce international trade? We answer this question using a large annual panel data set covering 217 countries from 1948 through 1997. During this sample a large number of countries left currency unions; they experienced economically and statistically significant declines in bilateral trade, after accounting for other factors. Assuming symmetry, we estimate that a pair of countries that starts to use a common currency experiences a doubling in bilateral trade.

Suggested Citation: Suggested Citation

Glick, Reuven and Rose, Andrew Kenan and Rose, Andrew Kenan, Does a Currency Union Affect Trade? The Time Series Evidence (July 2001). NBER Working Paper No. w8396, Available at SSRN: https://ssrn.com/abstract=277306