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Impact of Single Currency Adoption on Trade Flows: The Panel Data Evidence

Mohd Hussain Kunrooa and Naushad Ali Azad
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Mohd Hussain Kunrooa: Department of Economics, Jamia Millia Islamia University, New Delhi, India.
Naushad Ali Azad: Department of Economics, Jamia Millia Islamia University, New Delhi, India.

International Journal of Economics and Empirical Research (IJEER), 2015, vol. 3, issue 9, 433-439

Abstract: Purpose: In this study, we investigate the trade effects of the Euro on European Economic and Monetary Union (EMU) countries from 1994 to 2011 by adopting the gravity model of international trade. Methodology- We implement panel data econometric technique of Hausman and Taylor (1981) estimator to characterize bilateral trade and export flows. Findings- The results of Hausman and Taylor estimator exhibit that the bilateral trade and exports of the EMU economies increase by about 12% and 7%, respectively, when both the countries use the euro as its currency. Recommendations- The reported results have important policy implication for the countries considering joining the euro

Keywords: Bilateral Trade; Euro; Currency Union; Panel Data; Gravity model; HT Estimator (search for similar items in EconPapers)
JEL-codes: C23 F15 F36 (search for similar items in EconPapers)
Date: 2015
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