Review of World Economics

, Volume 146, Issue 2, pp 241–261

Rose effect and the euro: is the magic gone?

Original Paper

DOI: 10.1007/s10290-010-0050-1

Cite this article as:
Havránek, T. Rev World Econ (2010) 146: 241. doi:10.1007/s10290-010-0050-1

Abstract

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).

Keywords

Rose effectTradeCurrency unionEuroMeta-analysisPublication bias

JEL Classification

C42F15F33

Copyright information

© Kiel Institute 2010

Authors and Affiliations

  1. 1.Economic Research and Financial Stability DepartmentCzech National BankPrague 1Czech Republic
  2. 2.Institute of Economic StudiesCharles University in PraguePrague 1Czech Republic