DP11532 Why Do Estimates of the EMU Effect On Trade Vary so Much?

Author(s):	Andrew K Rose
Publication Date:	September 2016
Keyword(s):	common, country, currency, exports, Gravity, meta, monetary, panel, span, union
JEL(s):	F14, F33
Programme Areas:	International Trade and Regional Economics, International Macroeconomics and Finance
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=11532

Larger data sets, with more countries and a longer span of time, exhibit systematically larger effects of European monetary union on trade. I establish this stylized fact with meta-analysis and confirm it by estimating a plain-vanilla gravity model. I then explain this finding by examining systematic biases in "multilateral resistance to trade"? manifest in time-varying country fixed effects; bias grows as the sample is truncated by dropping small poor countries.