Rose effect and the euro: is the magic gone?
- Tomáš HavránekAffiliated withEconomic Research and Financial Stability Department, Czech National BankInstitute of Economic Studies, Charles University in Prague Email author
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This paper presents an updated meta-analysis of the effect of currency unions on trade, focusing on the euro area. Using meta-regression methods such as the funnel asymmetry test, evidence for strong publication bias is found. The estimated underlying effect for currency unions other than the eurozone reaches more than 60%. However, according to the meta-regression analysis, the euro’s trade promoting effect corrected for publication bias is insignificant. The Rose effect literature shows signs of the economics research cycle: reported t-statistic is a quadratic concave function of the publication year. Explanatory meta-regression (robust fixed effects and random effects), that can explain about 70% of the heterogeneity in the literature, suggests that results published by some authors might consistently differ from the mainstream output and that study outcomes are systematically dependent on study design (usage of panel data, short- or long-run nature, number of countries in the data set).
KeywordsRose effect Trade Currency union Euro Meta-analysis Publication bias
JEL ClassificationC42 F15 F33
- Rose effect and the euro: is the magic gone?
Review of World Economics
Volume 146, Issue 2 , pp 241-261
- Cover Date
- Print ISSN
- Online ISSN
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- Rose effect
- Currency union
- Publication bias
- Industry Sectors
- Tomáš Havránek (1) (2)
- Author Affiliations
- 1. Economic Research and Financial Stability Department, Czech National Bank, Na Prikope 28, 115 03, Prague 1, Czech Republic
- 2. Institute of Economic Studies, Charles University in Prague, Opletalova 26, 110 00, Prague 1, Czech Republic