Document Type

Article

Publication Date

2010

Abstract

We extend much research that has been devoted to the effects of the European Monetary Union (EMU) on international trade by introducing monetary regime variables in bilateral export equations with the objective of capturing the effects on trade of changes in monetary regimes relative to the pure EMU effects. To make the analysis relevant from an Asian perspective trade effects of the EU’s internal markets are also separated from EMU effects. To identify these different effects we include three groups of countries in our sample: EMU countries which are also members of the EU, EU countries outside the EMU and non-EU countries. The last control group consists of either non-EU industrial countries or non-EU industrial plus emerging market countries.

Asian experiences with inflation targeting are discussed and compared to the empirical results we obtain for trade effects of monetary regimes. Even if deeper monetary integration leads to greater trade expansion, it involves political complexity. The choice of an appropriate monetary regime can be a relatively simple unilateral tool for expanding trade.

Comments

This is a pre-copy-editing, author-produced PDF of an article accepted for publication in Review of Market Integration, volume 2, issue 2-3, 2010 following peer review. The definitive publisher-authenticated version is available online at DOI: 10.1177/097492921000200304.

Peer Reviewed

1

Copyright

The authors

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