Through joining the European Economic and Monetary Union a heterogeneous influence of member states cannot be avoided but all countries follow the logic of the economic benefits of unification. Besides reducing transaction costs, greater transparency in prices and the elimination of the...

Two seemingly unconnected empirical results suggest an intriguing mechanism. First, economic integration helps harmonize prices internationally, with trade being the primary channel (Rogoff 1996, Goldberg and Knetter 1997). Second, monetary union may greatly increase the amount of trade among...