Trade Effects of Currency Unions: Do Economic Dissimilarities Matter?

October 1, 2008

Preview Citation

Format: Chicago

Giorgia Albertin. Trade Effects of Currency Unions: Do Economic Dissimilarities Matter?, (USA: International Monetary Fund, 2008) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper provides a general equilibrium analysis of the trade effects of the formation of a currency union, and of its subsequent enlargement to include an economically dissimilar country. Furthermore, it investigates how economic dissimilarities among countries affect the magnitude of the trade effects fostered by a common currency. We show that sharing a common currency enhances the volume of bilateral trade among countries. However, the more economically dissimilar is an accession country, compared to the original members of a currency union, the smaller are the gains in trade that would follow the enlargement of a currency union.

Subject: Imports, Monetary unions, Plurilateral trade, Trade balance, Wages

Keywords: Currency union, Trade cost, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/249
Stock No:

WPIEA2008249
ISBN:

9781451871074
ISSN:

1018-5941

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