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Article
Disaggregated trade and disaggregated currency unions: a ranking of common currency effects
Agricultural Economics (2016)
  • Gregory W WHITTEN
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.
Keywords
  • Agriculture,
  • Currency union,
  • Gravity equation,
  • International trade,
  • Manufacturing
Publication Date
2016
DOI
10.1111/agec.12263
Citation Information
Gregory W WHITTEN. "Disaggregated trade and disaggregated currency unions: a ranking of common currency effects" Agricultural Economics Vol. 47 Iss. 6 (2016) p. 661 - 670 ISSN: 1574-0862
Available at: http://works.bepress.com/gregory_whitten/8/