Measuring the Trade Effects of EMU

Hamid Faruqee

No 2004/154, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the impact of European Economic and Monetary Union (EMU) on trade within the euro area. Using panel data for 22 industrial countries, the analysis estimates the effect of the euro's arrival on area-wide trade compared to bilateral trade flows between other industrial countries. Controlling for other influences according to the "gravity" model of trade, the panel analysis employs cointegration techniques to obtain reliable point estimates of EMU trade effects. Cross-country differences with respect to EMU trade gains and underlying factors accounting for these differences are also further explored.

Keywords: WP; trade; monetary union; trade gain; EMU trade effect; Currency unions; gravity model; bilateral trade; EMU trade impact; -area trade; EMU membership; industry trade share; aggregate EMU variable; Monetary unions; Trade balance; Currencies; Labor unions; Exchange rates; Europe (search for similar items in EconPapers)
Pages: 29
Date: 2004-08-01
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Citations: View citations in EconPapers (67)

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