The Trade Impact of China on EMU: Is It Even Across Members?
September 1, 2012
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Summary
This paper investigates the asymmetries in trade spillovers from sector-specific technology shocks in China to selected euro area countries. We use a Ricardian-gravity trade model to estimate sectoral competitiveness in individual euro area countries. Simulations on the impact of productivity shocks in Chinese textiles and machinery suggest that the required adjustment in wages, prices, and factor re-allocation is widely heterogenous across euro area countries on accounts of their different specialization patterns. This raises the question of the distribution of gains and losses from external trade shocks.
Subject: Competition, Exports, Financial markets, International trade, Labor, Technology, Trade deficits, Wages
Keywords: China, Competition, cost provider, EMU trade, Euro area, European Monetary Union, Exports, exports to the euro area, Global, goods market, goods spending, International trade, nominal wages decline, Ricardian-gravity trade model, sectoral specialization, surplus nation, textiles' share, Trade deficits, trade share, trade theory, Wages, WP
Pages:
25
Volume:
2012
DOI:
Issue:
221
Series:
Working Paper No. 2012/221
Stock No:
WPIEA2012221
ISBN:
9781475510287
ISSN:
1018-5941
