EconPapers    
Economics at your fingertips  
 

Convergence of shocks and trade in the enlarged European Union

Athina Zervoyianni () and Athanasios Anastasiou ()

The Journal of International Trade & Economic Development, 2009, vol. 18, issue 1, 79-114

Abstract: This paper explores the relation between trade flows and cross-country symmetry of supply and demand shocks using data from the EU-27 countries. Increased bilateral trade intensity is found to have a positive impact on the correlation of both demand and supply shocks. Intra-industry trade is found to be positively linked to correlations of supply-side shocks but negatively linked to correlations of demand shocks. Our results thus provide support for the argument that aggregate demand spillovers and intra-industry trade, rather than specialization, dominate in the process through which trade flows affect the cross-country transmission of shocks in Europe. At the same time, our estimates suggest that monetary-policy convergence in Europe (the circulation of the euro), while having increased symmetry of supply-side shocks, has had no direct favourable impact on symmetry of demand shocks. By contrast, the process of fiscal-policy convergence is found to have resulted in more correlated demand shocks across the EU member states.

Keywords: trade flows; convergence of shocks; European integration; cyclical macroeconomic fluctuations (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/09638190902757434 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: CONVERGENCE OF SHOCKS AND TRADE IN THE ENLARGED EUROPEAN UNION (2008) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jitecd:v:18:y:2009:i:1:p:79-114

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RJTE20

Access Statistics for this article

The Journal of International Trade & Economic Development is currently edited by Professor Pasquale Sgro

More articles in The Journal of International Trade & Economic Development from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

 
Page updated 2019-11-06
Handle: RePEc:taf:jitecd:v:18:y:2009:i:1:p:79-114