Why Do Estimates of the EMU Effect On Trade Vary so Much? Andrew K. Rose*
Updated: September 27, 2016
Abstract 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.
Keywords: gravity, exports, span, country, meta, common, currency, monetary, union, panel.