Working Paper: CEPR ID: DP6254
Authors: Andrew K. Rose
Abstract: This paper studies the characteristics of departures from monetary unions. During the post-war period, almost seventy distinct countries or territories have left a currency union, while over sixty have remained continuously in currency unions. I compare countries leaving currency unions to those remaining within them, and find that leavers tend to be larger, richer, and more democratic; they also tend to have higher inflation. However, there are typically no sharp macroeconomic movements before, during, or after exits.
Keywords: country data; empirical; monetary; panel; probit; statistics
JEL Codes: E42; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| country size (R12) | inflation (E31) |
| country size (R12) | likelihood of exiting a currency union (F36) |
| income (E25) | likelihood of exiting a currency union (F36) |
| government spending (H59) | likelihood of exiting a currency union (F36) |
| inflation (E31) | likelihood of exiting a currency union (F36) |
| trade openness (F43) | likelihood of exiting a currency union (F36) |
| independence (F54) | likelihood of exiting a currency union (F36) |
| inflation (E31) | currency union membership (F36) |
| exiters (Y60) | real GDP per capita (O49) |
| government sector size (H11) | likelihood of exiting a currency union (F36) |