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Zooming out: The trade effect of the euro in historical perspective

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Author Info
Berger, Helge
Nitsch, Volker

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Abstract

In this paper, we put the trade effect of the euro in historical perspective. Using a data set that includes 22 industrial countries from 1948 to 2003, we find strong evidence of a gradual increase in trade intensity between European countries over time. Once we control for this trend in trade integration, the euro's impact on trade disappears. Moreover, a significant part of the trend in European trade integration is associated with measurable policy changes in areas such as exchange rate policy and institutional integration.

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File URL: http://www.sciencedirect.com/science/article/B6V9S-4T54286-1/2/47d98f5bf99b201bd6d0f370edc4874c
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Publisher Info
Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 27 (2008)
Issue (Month): 8 (December)
Pages: 1244-1260
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Handle: RePEc:eee:jimfin:v:27:y:2008:i:8:p:1244-1260

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Web page: http://www.elsevier.com/locate/inca/30443

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Related research
Keywords: Monetary union Currency Euro Trade European integration;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Sergio Nardis, 2003. "Currency unions and trade: The special case of EMU," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 139(4), pages 625-649, December. [Downloadable!] (restricted)
    Other versions:
  2. Alejandro Micco & Ernesto Stein & Guillermo OrdoÒez, 2003. "The currency union effect on trade: early evidence from EMU," Economic Policy, CEPR, CES, MSH, vol. 18(37), pages 315-356, October. [Downloadable!] (restricted)
    Other versions:
  3. Hamid Faruqee, 2004. "Measuring the Trade Effects of EMU," IMF Working Papers 04/154, International Monetary Fund. [Downloadable!]
  4. Maurice J.G. Bun & Franc J.G.M. Klaassen, 2002. "Has the Euro increased Trade?," Tinbergen Institute Discussion Papers 02-108/2, Tinbergen Institute. [Downloadable!]
  5. Torsten Persson, 2001. "Currency unions and trade: how large is the treatment effect?," Economic Policy, CEPR, CES, MSH, vol. 16(33), pages 433-462, October. [Downloadable!] (restricted)
  6. Michael W. Klein & Jay C. Shambaugh, 2004. "Fixed Exchange Rates and Trade," NBER Working Papers 10696, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Andrew K. Rose, 2000. "One money, one market: the effect of common currencies on trade," Economic Policy, CEPR, CES, MSH, vol. 15(30), pages 7-46, 04. [Downloadable!] (restricted)
  8. José De Sousa & Julie Lochard, 2004. "The currency union effect on trade and the FDI channel," Cahiers de la Maison des Sciences Economiques j04111, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  9. Richard Baldwin & Frauke Skudelny & Daria Taglioni, 2005. "Trade effects of the euro - evidence from sectoral data," Working Paper Series 446, European Central Bank. [Downloadable!]
  10. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 653-79, August. [Downloadable!] (restricted)
  11. Nitsch, Volker, 2005. "Currency union entries and trade," Discussion Papers 2005/9, Free University Berlin, School of Business & Economics. [Downloadable!]
  12. David Barr & Francis Breedon & David Miles, 2003. "Life on the outside: economic conditions and prospects outside euroland," Economic Policy, CEPR, CES, MSH, vol. 18(37), pages 573-613, October. [Downloadable!] (restricted)
  13. Maurice J. G. Bun & Franc J. G. M. Klaassen, 2007. "The Euro Effect on Trade is not as Large as Commonly Thought," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(4), pages 473-496, 08. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Sergio de Nardis & Roberta De Santis & Claudio Vicarelli, 2008. "The Euro's Effects on Trade in a Dynamic Setting," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 5(1), pages 73-85, June. [Downloadable!]
    Other versions:
  2. Felix Chan & Tommaso Mancini-Griffoli & Laurent L. Pauwels, 2006. "Stability tests for heterogeneous panel data," PSE Working Papers 2006-49, PSE (Ecole normale supérieure). [Downloadable!]
    Other versions:
  3. Sergio de Nardis & Roberta De Santis & Claudio Vicarelli, 2007. "The single currency’s effects on Eurozone sectoral trade: winners and losers?," ISAE Working Papers 88, ISAE - Institute for Studies and Economic Analyses - (Rome, ITALY). [Downloadable!]
    Other versions:
  4. Baldwin, Richard & Taglioni, Daria, 2006. "Gravity for Dummies and Dummies for Gravity Equations," CEPR Discussion Papers 5850, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. Tommaso Mancini Griffoli, 2006. "Explaining the Euro's Effect on Trade? Interest Rates in an Augmented Gravity Equation," HEI Working Papers 10-2006, Economics Section, The Graduate Institute of International Studies. [Downloadable!]
  6. Philip R. Lane, 2006. "The Real Effects of EMU," The Institute for International Integration Studies Discussion Paper Series iiisdp115, IIIS. [Downloadable!]
    Other versions:
  7. Gianmarco Ottaviano & Daria Taglioni & Filippo di Mauro, 2007. "Deeper, wider and more competitive? Monetary integration, eastern enlargement and competitiveness in the European Union," Working Paper Series 847, European Central Bank. [Downloadable!]
  8. Francesco Paolo Mongelli & Juan Luis Vega, 2006. "What effects is EMU having on the euro area and its member countries? An overview," Working Paper Series 599, European Central Bank. [Downloadable!]
  9. Rolf J. Langhammer & Rainer Schweickert, 2006. "EU Integration and its Implications for Asian Economies – What we Know and What Not," Kiel Working Papers 1264, Kiel Institute for the World Economy. [Downloadable!]
  10. Tomáš Havránek, 2009. "Rose Effect and the Euro: The Magic is Gone," Working Papers IES 2009/20, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Aug 2009. [Downloadable!]
  11. Matthias Helble, 2007. "Border Effect Estimates for France and Germany Combining International Trade and Intranational Transport Flows," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 143(3), pages 433-463, October. [Downloadable!] (restricted)
  12. Tryggvi Thor Herbertsson & Gylfi Zoega, 2006. "On the fringe of Europe: Iceland's currency dilemma," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 7(2), pages 41-51, 07. [Downloadable!]
  13. Tommaso Mancini-Griffoli & Laurent L. Pauwels, 2006. "Is There a Euro Effect on Trade? An Application of End-of-Sample Structural Break Tests for Panel Data," HEI Working Papers 04-2006, Economics Section, The Graduate Institute of International Studies, revised Apr 2006. [Downloadable!]
  14. Ansgar Belke & Julia Spies, 2008. "Enlarging the EMU to the east: what effects on trade?," Empirica, Springer, vol. 35(4), pages 369-389, September. [Downloadable!] (restricted)
    Other versions:
  15. Jürgen Bitzer & Ingo Geishecker, 2005. "What Drives Trade-related R&D Spillovers? Decomposing Knowledge- diffusing Trade Flows," International Trade 0512010, EconWPA. [Downloadable!]
    Other versions:
  16. Fritz Breuss, 2006. "Why Does Austria's Economy Grow Faster than Germany's?," WIFO Working Papers 280, WIFO. [Downloadable!]
  17. Herwartz, Helmut & Weber, Henning, 2008. "When, how fast and by how much do trade costs change in the euro area?," Economics Working Papers 2008,17, Christian-Albrechts-University of Kiel, Department of Economics. [Downloadable!]
    Other versions:
  18. Artis, Michael J, 2006. "What Do We Now Know About Currency Unions?," CEPR Discussion Papers 5677, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  19. Gianluca Cafiso, 2008. "The euro's influence upon trade - Rose effect versus border effect," Working Paper Series 941, European Central Bank. [Downloadable!]
  20. Christine Dwane & Philip R. Lane & Tara McIndoe, 2007. "Currency Unions and Irish External Trade," The Institute for International Integration Studies Discussion Paper Series iiisdp189, IIIS. [Downloadable!]
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