Resumen de Do International Clearing Unions enhance trade?: An empirical evaluation of the Asian Clearing Union

Vijay Singh Shekhawati, Vinish Kathuria

• The Asian Clearing Union (ACU) is expected to enhance international trade of its member countries without the need for them to hold excessive international reserves, either as assurance or for external trade settlements. This study investigates the effect of ACU (having nine members) on external trade using bilateral trade data of 963 country pairs over a thirty three year period from 1980 to 2013.

  Accommodating the selection bias caused by zero trade observations, the results of various estimations including Heckman two-step and pseudo poisson maximum likelihood suggests that median trade growth within ACU is lower than their trade growth of the ACU members with non-members within a range of 45 to 68 percent.

  Results of the study can be generalized to indicate that a clearing system has the potential to obstruct trade in the absence of alternative channels for settlements.