Has the Euro increased Trade?

Maurice J.G. Bun () and Franc Klaassen
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Maurice J.G. Bun: Faculty of Economics and Econometrics, University of Amsterdam

No 02-108/2, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: See also 'The Euro Effect on Trade is not as Large as commonly thought' in the Oxford Bulletin of Economics and Statistics . Vol. 69, pages 473-496.

A major economic reason for the introduction of the euro was its supposedly positive effect on intra-EMU trade. Existing studies examine this suspicion indirectly using non-EMU data and report ambiguous results. We estimate the euro-effect directly from data that include EMU observations. Using a dynamic panel model for annual bilateral exports, we find that the euro has significantly increased trade, with an effect of 4% in the first year and cumulating to around 40% in the long-run. These estimates can be useful in the debates on whether to join the euro in countries such as the U.K.

Keywords: Currency union; dynamic panel data model; EMU; exports; imperfect substitutes model. (search for similar items in EconPapers)
JEL-codes: C23 F15 F33 (search for similar items in EconPapers)
Date: 2002-10-24
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Citations: View citations in EconPapers (39)

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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20020108

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