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THE IMMEDIATE IMPACT OF EURO ON INTRA-REGIONAL TRADE: AN EVENT STUDY APPROACH

Ruhul Salim and Shahriar Kabir

Journal of Economic Development, 2010, vol. 35, issue 3, 43-55

Abstract: This article applies the event study approach to assess the immediate impact of Euro on intra-regional trade among the European Union (EU) members. Here, the post-Euro intra-regional trade has been compared with the pre-Euro intra-regional trade, while the implementation of Euro has been considered as the event. The results show that the trade enhancement at the immediate post-event period is 1.2 times of the immediate pre-event period for France, Germany, Italy and Spain, while immediate trade enhancement for all Euro-members is 1.14 times. The estimation has been statistically justified by using the gravity model. This study thus provides the first empirical evidence on the assessment of currency union impact on intra-regional trade by using the alternative method, the event study approach.

Keywords: Currency Union; Intra-Regional Trade; Event Study; Trade Deepening (search for similar items in EconPapers)
JEL-codes: C14 C33 F14 F17 R12 (search for similar items in EconPapers)
Date: 2010
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