How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this framework to the effect of currency unions on international trade. While we...

The aim of this paper is to estimate the trade gains arising from the constitution ofa currency union for a set of economically large, developed nations who create a monetary union as a deliberate economic policy action: namely, for the members of the euro area. With a 1980-2001 sample, no...

The aim of this paper is to estimate the trade gains arising from the constitution ofa currency union for a set of economically large, developed nations who create a monetary union as a deliberate economic policy action: namely, for the members of the euro area. With a 1980-2001 sample, no...

The paper explores the interaction between the proposed monetary union for ECOWAS and structural reforms of fiscal policy. The effects depend to a large extent on the degree of similarity of member countries. In a monetary union of similar countries, member states run a more distortive fiscal...

Recently a variety of exchange and interest rate models capturing the dynamics during the transition from an exchange rate arrangement of floating rates into a currency union have been derived. While these stochastic equilibrium models in continous time are theoretically rigorous, a systematic...

Recently various exchange rate models capturing the dynamics during the transition from an exchange rate arrangement of floating rates into a currency union have been derived. Technically, these stochastic equilibrium models are diffusion processes which have to be estimated by discretely...