Document Type

Journal article

Source Publication

Agricultural Economics

Publication Date

11-2016

Volume

47

Issue

6

First Page

661

Last Page

670

Publisher

Wiley-Blackwell Publishing, Inc.

Keywords

Agriculture, Currency union, Gravity equation, International trade, Manufacturing

Abstract

Andrew Rose has long argued that a common currency has a large effect on increasing trade. Recently, Rose has called into question the reliability of this conclusion, as new techniques have emerged for estimating gravity equations. This article uses the sector-specific gravity model developed by Anderson and Yotov (2010a) to investigate if disaggregated trade can provide a reliable estimate of a common currency’s effect. Disaggregating trade alone is insufficient to obtain a reliable estimate of a currency union, regardless of econometric technique, when the effect of a common currency on trade is uniform across all unions. Disaggregating the universe of currency unions with individual effects provides a reliable ranking of currency unions, independent of estimation method, by the effect that each union’s currency has on increasing trade. These rankings differ across sectors.

DOI

10.1111/agec.12263

Print ISSN

01695150

E-ISSN

15740862

Publisher Statement

Copyright © 2016 International Association of Agricultural Economists

Access to external full text or publisher's version may require subscription.

Full-text Version

Accepted Author Manuscript

gregory_whitten_9.pdf (215 kB)
Appendix

Language

English

Recommended Citation

Whitten, G. W. (2016). Disaggregated trade and disaggregated currency unions: A ranking of common currency effects. Agricultural Economics, 47(6), 661-670. doi: 10.1111/agec.12263

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