Intra- and extra-euro area import demand for manufactures
Frauke Skudelny (),
Badi Baltagi () and
No 532, Working Paper Series from European Central Bank
The aim of this paper is to improve our understanding of the key determinants of intra- and extra-euro area imports. Using a simultaneous equation estimation framework, and pooling the data across nine euro area countries as an approximation of the euro area, we estimate intra- and extra-euro area import demand functions and impose various restrictions within and across equations. We find that there are significant substitution effects between intra- and extra-euro area imports due to changes in their relative prices, while exchange rate volatility decreases trade vis-à-vis regions characterised by volatility and leads to substitution of trade away from higher-volatility regions towards lower-volatility regions. JEL Classification: C32, C33, E00, E32, O3
Keywords: intra- and extra-euro area imports; substitution; three stage least squares; trade integration (search for similar items in EconPapers)
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Journal Article: Intra- and Extra-Euro Area Import Demand for Manufactures (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:2005532
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