Investigating the Effects of Euro on Bilateral Trade: a Kernel Matching Approach

Georgios Fotopoulos and Dionysios Psallidas ()
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Dionysios Psallidas: University of Patras, Postal: University of Patras, Department of Economics, University Campus- Rio, Patras 26504, Greece

Journal of Economic Integration, 2009, vol. 24, 661-684

Abstract:

The aim of this paper is to estimate the effects of the adoption of the Euro on the bilateral trade of European and OECD countries. Using the most recently available data and a more appropriate deflator of bilateral trade, this research tries to assess whether EMU countries trade more than they would have if they had not adopted the Euro. In doing so an augmented ‘difference in differences’ approach is used. The results obtained show that the adoption of the Euro increased trade significantly and that there is also no evidence of trade diversion effects.

Keywords: European Union; common currency; difference-in-differences estimation; trade creation; kernel matching (search for similar items in EconPapers)
JEL-codes: C14 F15 F33 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0489

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