This article examines the impact of monetary union – the decision of two or more States adopt the same currency – for international trade. It shows that even if all other relevant factors are held constant currency unions have a significant impact on trade: countries that share the same currency trade three times as much with each other as with countries with different currencies. This analysis suggests that the impact of the single European currency on trade – and thus competition – … Read more »

This article examines the impact of monetary union – the decision of two or more States adopt the same currency – for international trade. It shows that even if all other relevant factors are held constant currency unions have a significant impact on trade: countries that share the same currency trade three times as much with each other as with countries with different currencies. This analysis suggests that the impact of the single European currency on trade – and thus the competition -. Within Europe is much more extensive than many observers have predicted
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Andrew K. Rose
Source: California Management Review
12 pages.
Release Date: 1 January 2000. Prod #: CMR166-PDF-ENG
Is there a Monetary Union Boost International Trade? HBR case solution

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