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Who benefits from euro depreciation in the euro zone?

Mohsen Bahmani-Oskooee () and Amirhossein Mohammadian

Empirica, 2019, vol. 46, issue 3, No 11, 577-595

Abstract: Abstract In this paper, we try to assess the short-run and long-run effects of changes in the value of the euro on the trade balance of 12 original members of the euro zone to identify those who benefit from euro depreciation. After estimating a linear and a nonlinear trade balance model for each country, the results favor the nonlinear adjustment of the real euro and nonlinear models. We find that while seven members will benefit from a euro depreciation, Germany is the only country that will also benefit from a euro appreciation, perhaps due to an inelastic world demand for German goods. The results also support asymmetric effects of euro appreciation and euro depreciation in most countries in the zone, in the short run as well as in the long run.

Keywords: Euro zone; Euro; Trade balance; Asymmetry (search for similar items in EconPapers)
JEL-codes: F31 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s10663-018-9408-8

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Handle: RePEc:kap:empiri:v:46:y:2019:i:3:d:10.1007_s10663-018-9408-8