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APEC: INTERNATIONAL TRADE AND OUTPUT
Author(s) -
Kurihara Yutaka
Publication year - 2003
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2003.00222.x
Subject(s) - economics , international economics , liberian dollar , currency union , currency , exchange rate , gravity model of trade , per capita , per capita income , monetary economics , international trade , population , demography , finance , sociology
. This paper estimates the effect that the APEC ‘currency union’, loosely defined, has on trade and, via trade, on output per capita. A gravity model is used to measure the impact of exchange‐rate variability on trade flows within APEC. The gain in trade flows from eliminating nominal exchange‐rate variability through the formation of a currency union is less than 1%. Furthermore, every 1% increase in trade (relative to GDP) raises income per capita by roughly 0.3% for twenty years. Adopting the dollar currency union is much more profitable than adopting a yen currency union for each country in APEC.