Review of World Economics

, Volume 146, Issue 2, pp 241–261 | Cite as

Rose effect and the euro: is the magic gone?

  • Tomáš HavránekEmail author
Original Paper


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).


Rose effect Trade Currency union Euro Meta-analysis Publication bias 

JEL Classification

C42 F15 F33 



This work was supported by the IES Research Institutional Framework 2005–2010 (MSMT 0021620841). I thank Roman Horváth, Zuzana Iršová, Tom Stanley, Katerina Šmídková, and participants of the ETPM seminar at the Charles University in Prague for valuable comments. I am especially grateful to an anonymous referee of this journal for very useful suggestions that led to a substantial improvement in the quality and readability of the article. All remaining errors and omissions are mine. The views expressed are those of the author and do not necessarily reflect the views of the Czech National Bank.


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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

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