Chapter

Comparing Apples and Oranges: The Effect of Multilateral Currency Unions on Trade

Volker Nitsch

in Monetary Unions and Hard Pegs

Published in print March 2004 | ISBN: 9780199271405
Published online August 2004 | e-ISBN: 9780191601200 | DOI: http://dx.doi.org/10.1093/0199271402.003.0006
 Comparing Apples and Oranges: The Effect of Multilateral Currency Unions on Trade

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This chapter explores whether the two multilateral currency unions that have existed much longer than EMU have had a measurable effect on intraregional trade. They are (1) the CFA franc zone in West and Central Africa and (2) the Eastern Caribbean Currency Union. Membership in a currency union indeed tends to promote trade, particularly among economically large countries. However, the pattern of intra-union trade deviates much less from otherwise similar non-union trade than previous estimates of a large trade-multiplying effect of common currencies suggest.

Keywords: CFA franc zone; currency-union effect on trade; Eastern Caribbean Currency Union; economic integration; multilateral currency union

Chapter.  4958 words. 

Subjects: Economic Systems

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