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Export behavior of German SMEs in the Eurozone

Kenan Bagci

International Economics and Economic Policy, 2013, vol. 10, issue 4, 613-629

Abstract: The paper investigates the export behavior of German small and medium-sized enterprises (SMEs) in response to the introduction of Euro and the subsequent fall in trade costs. Based on a testable prediction derived from Helpman et al. (American Economic Review 94:300–316, 2004 ) and Helpman (Journal of Economic Literature 44:589–630, 2006 ), the paper argues that the likelihood of SMEs to become an exporter increases after the monetary union. By using an empirical probit estimation technique, it is found that SMEs, and especially medium-sized enterprises, indeed benefit from cost reductions in entering into export markets. What is more, firms operating in furniture, electrical equipment, plastics, medical instruments, machinery and textiles are more likely to benefit from monetary union. These results are robust to using exchange rate volatility as a proxy for the cost reductions due to monetary union. Copyright Springer-Verlag Berlin Heidelberg 2013

Keywords: Monetary Union; Export Behavior; Small and Medium-sized Enterprises; F15; F33; D21; F23 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1007/s10368-012-0227-2

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