Reconsidering the Trade-Creating Effects of a Currency Union

Abstract

for their comments and suggestions. Much of this research was done while Wall was a visiting scholar at the Institute for Monetary and Economic Studies at the Bank of Japan, whose hospitality and resources are greatly appreciated. Rachel J. Mandal provided research assistance.

The euro’s effect on trade

“…This unnecessary aggregation led to the loss of information and made estimates less accurate. Many of these studies also used the logarithmic transformation of the average flow rather than averaging the logarithmic transformation of each flow as would be consistent with the gravity equation's theory (Baldwin et al, 2008: 15;Pakko and Wall, 2001). Another technical problem is the dropping of zero-trade observations (up to 30% of observations in Rose-type data sets) by some scholars (Santos-Silva and Tenreyro, 2006;Tenreyro, 2010).…”

Dollarization and trade

“…Other work that revisits the effect on trade of membership in a currency union includes Barro and Tenreyro (2003), Edwards (2001), Nitsch (2002a, 2002b, 2004, Persson (2001), Pakko and Wall (2001), and Thom and Walsh (2002). 4 For example, Frankel and Rose (2002) present an estimated coefficient on the currency union dummy variable of 1.38 in their Table 1, with an associated standard error of 0.19.…”

Russia's accession to the WTO: the potential for trade increase

“…Settler mortality is used in Acemoglu et al (2001) and the fraction of the population speaking English or French is introduced in Hall and Jones (1999) and Dollar and Kraay (2003). pair (i, j ) is considered (Pakko and Wall, 2001;Rose andVan Wincoop, 2001, andMaurel, 2004). We choose a combination of these strategies by instrumenting the endogenous variables, i.e., the institutions, and exploiting the cross section and dynamic dimensions of the panel data set using fixed-effect estimates.…”