Intra- and extra-euro area import demand for manufactures

Robert Anderton (), Badi Baltagi (), Frauke Skudelny () and Nuno Sousa
Additional contact information
Robert Anderton: European Central Bank and Special Professor at School of Economics, University of Nottingham, University Park, Nottingham NG7 2RD, United Kingdom., http://www.ecb.europa.eu/home/html/index.en.html
Frauke Skudelny: European Central Bank, Kaiserstrasse 29, Frankfurt am Main, Germany., http://www.ecb.europa.eu/home/html/index.en.html
Nuno Sousa: European Commission.

No 532, Working Paper Series from European Central Bank

Abstract: The aim of this paper is to improve our understanding of the key determinants of intra- and extra-euro area imports. Using a simultaneous equation estimation framework, and pooling the data across nine euro area countries as an approximation of the euro area, we estimate intra- and extra-euro area import demand functions and impose various restrictions within and across equations. We find that there are significant substitution effects between intra- and extra-euro area imports due to changes in their relative prices, while exchange rate volatility decreases trade vis-à-vis regions characterised by volatility and leads to substitution of trade away from higher-volatility regions towards lower-volatility regions.

Keywords: Intra- and extra-euro area imports; substitution; trade integration; three stage least squares. (search for similar items in EconPapers)
JEL-codes: F10 F15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-int
Date: 2005-10
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Related works:
Journal Article: Intra- and Extra-Euro Area Import Demand for Manufactures (2007)
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