Does a Currency Union Affect Trade? The Time Series Evidence

Reuven Glick, Andrew K. Rose

NBER Working Paper No. 8396
Issued in July 2001
NBER Program(s):International Finance and Macroeconomics, International Trade and Investment

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.

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Document Object Identifier (DOI): 10.3386/w8396

Published: Glick, Reuven and Andrew K. Rose. "Does A Currency Union Affect Trade? The Time-Series Evidence," European Economic Review, 2002, v46(6,Jun), 1125-1151. citation courtesy of

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