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
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