Kiel Working Papers, Kiel Institute for World Economics
No 1137:
Trade Effects of Monetary Integration in Large, Mature Economies: A Primer on the European Monetary Union
Lúcio Vinhas de Souza
Abstract: The aim of this paper is to estimate the trade gains
arising from the constitution of a currency union for a set of economically
large, developed nations who create a monetary union as a deliberate
economic policy action: namely, for the members of the euro area. With a
1980-2001 sample, no consistent significant trade effects from the 1999
creation of EMU are found, using dummies for the 1999-2001 period. Treating
EMU not as a single event but as a part of a long-term integration process,
and representing it by a series of continuous cross-country interest
differentials, the evidence seems to be stronger, but it does not seem to
be conditional on any single, specific exchange rate arrangement.
Keywords: Currency Unions, EU, EMU, panel model, gravity equation; (follow links to similar papers)
JEL-Codes: F15; F33; (follow links to similar papers)
23 pages, December 2002
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