Does a Currency Union Affect Trade? The Time Series Evidence


Andrew K. Rose

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2001-13 | September 1, 2001

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 near doubling in bilateral trade.

Article Citation

Rose, Andrew K., and Reuven Glick. 2001. “Does a Currency Union Affect Trade? The Time Series Evidence,” Federal Reserve Bank of San Francisco Working Paper 2001-13. Available at

About the Author
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Reuven Glick is a group vice president in the Economic Research Department of the Federal Reserve Bank of San Francisco. Learn more about Reuven Glick