Working Paper: NBER ID: w22678
Authors: Andrew K. Rose
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: EMU; Trade; Meta-analysis; Gravity model
JEL Codes: F14; F33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Larger datasets (C55) | Higher estimates of the EMU effect on trade (F17) |
| Dropping small and poor countries (O54) | Biases estimates downward (C51) |
| Including all available data (Y10) | Accurate estimates of the EMU trade effect (F17) |
| Sample size increases (C83) | EMU stimulates trade significantly (F10) |