Measuring the Trade Effects of EMU
August 1, 2004
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Summary
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.
Subject: Currencies, Economic integration, Exchange rates, Foreign exchange, International trade, Labor, Labor unions, Monetary unions, Money, Trade balance
Keywords: -area trade, aggregate EMU variable, bilateral trade, Currencies, Currency unions, EMU membership, EMU trade effect, EMU trade impact, Europe, Exchange rates, gravity model, industry trade share, Labor unions, monetary union, Monetary unions, trade, Trade balance, trade gain, WP
Pages:
29
Volume:
2004
DOI:
Issue:
154
Series:
Working Paper No. 2004/154
Stock No:
WPIEA1542004
ISBN:
9781451857269
ISSN:
1018-5941
