Out in the cold? Iceland's trade performance outside the European Union and European Monetary Union

Although entering currency (and customs) unions involve both costs and benefits, an increasing body of research is finding that the benefits—in terms of international trade creation—are remarkably large. Focusing simply on the European Monetary Union (EMU) rather than the broad range of currency uni...

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Bibliographic Details
Published in:Cambridge Journal of Economics
Main Authors: Breedon, Francis, Pétursson, Thórarinn G.
Format: Text
Language:English
Published: Oxford University Press 2006
Subjects:
ARTICLES
Iceland
Online Access:http://cje.oxfordjournals.org/cgi/content/short/30/5/723
https://doi.org/10.1093/cje/bei105
Description
Summary:Although entering currency (and customs) unions involve both costs and benefits, an increasing body of research is finding that the benefits—in terms of international trade creation—are remarkably large. Focusing simply on the European Monetary Union (EMU) rather than the broad range of currency unions studied by other authors, we find that the trade impact of EMU is smaller, but still substantial. Our findings suggest that the Iceland's trade could increase by about 60% and that the trade-to-GDP ratio could rise by 12 percentage points should Iceland join the European Union and EMU.

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