/* stata do-file for replication of models 1 - 8 in tables 2 and 3 of "External Effects Currency Unions" by Thomas Plümper and Vera E. Troeger*/

/* all variables used are labeled in the stata data set cecu_replication.dta */


set mem 10000
set more off
set mat

cd c:\        /* specify the working directory where you have put the data set and want to save the results */

use cecu_replication.dta

log using cecu_replication.log, replace

/* Models 1 and 2 of table 2 test the major assumption of the model that changes in the difference the interest rates between the currency Union and the outsider countries have an exchange rate effect and this effect is the larger the bigger the currency union*/

* Table 2: Model 1

reg d_exrate ddiff_ir_ircu70_94 ddiff_ir_ircu94_02


* Table 2: Model 2

reg d_exrate dir70_94 dir94_02


/ models 3 to 8 of table 3 test the main hypothesis that outsider countries more closely followed the monetary policy of the key currency after the currency union became into being. */


* Table 3: Model 3

arch dreal_ir dreal_ircu70_94 dreal_ircu94_02 real_ir, arch(1) garch(1)


* Table 3: Model 4

arch dreal_ir dreal_ircu70_90 dreal_ircu90_94 dreal_ircu94_99 dreal_ircu99_02 real_ir, arch(1) garch(1)


* Table 3: Model 5

arch dreal_ir dreal_ircu70_94 dreal_ircu94_02 real_ir d_exrate, arch(1) garch(1)


* Table 3: Model 6

arch dreal_ir dreal_ircu70_94 dreal_ircu94_02 real_ir d_exrate growth growth_cu, arch(1) garch(1)


* Table 3: Model 7
arch dreal_ir dreal_ircu70_94 dreal_ircu94_02 real_ir, arch(1) garch(1) ma(1)


* Table 3: Model 8

arch dreal_ir dreal_ircu70_94 dreal_ircu94_02 real_ir  _Ic_code_2 _Ic_code_3 _Ic_code_4 _Ic_code_6, arch(1) garch(1)


log close