Abstract
The effect of common currency on bilateral trade also called Rose effect has been examined extensively in past decade. There is a huge variance of results in primary research which drives a large debate.
Using meta-analysis we exploit 51 studies and 3254 estimates of rose effect and provide empirical review. Our results are in contrast with the most recent studies examining the effect of euro on bilateral trade and we found that publication bias in this area of research is diminishing.
This study finds the effect of euro on bilateral trade to be between 2 and 6%. Using meta regression we conclude that data source, data structure and control variables are significantly affecting the estimated effect size, but estimation technique used does not.