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The Immediate Impact Of Euro On Intra-Regional Trade: An Event Study Approach

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  • Ruhul Salim

    ()
    (Curtin Business School, Curtin University of Technology)

  • Shahriar Kabir

    (Curtin Business School, Curtin University of Technology)

Abstract

This article applies the event study approach to assess the immediate impact of Euro on intra-regional trade among the European Union (EU) members. Here, the post-Euro intra-regional trade has been compared with the pre-Euro intra-regional trade, while the implementation of Euro has been considered as the event. The results show that the trade enhancement at the immediate post-event period is 1.2 times of the immediate pre-event period for France, Germany, Italy and Spain, while immediate trade enhancement for all Euro-members is 1.14 times. The estimation has been statistically justified by using the gravity model. This study thus provides the first empirical evidence on the assessment of currency union impact on intra-regional trade by using the alternative method, the event study approach.

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Bibliographic Info

Article provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.

Volume (Year): 35 (2010)
Issue (Month): 3 (September)
Pages: 43-55

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Handle: RePEc:jed:journl:v:35:y:2010:i:3:p:43-55

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Related research

Keywords: Currency Union; Intra-Regional Trade; Event Study; Trade Deepening;

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  1. Pastore Francesco & Ferragina Anna Maria & Giovannetti Giorgia, 2009. "A Tale of Parallel Integration Processes: A Gravity Analysis of EU Trade with Mediterranean and Central and Eastern European Countries," Review of Middle East Economics and Finance, De Gruyter, vol. 5(2), pages 21-44, September.
  2. K. Kalirajan, 1999. "Stochastic varying coefficients gravity model: An application in trade analysis," Journal of Applied Statistics, Taylor & Francis Journals, vol. 26(2), pages 185-193.
  3. Rodney Thom & Brendan Walsh, 2001. "The Effect of a Common Currency on Trade - Ireland before and after the Sterling Link," Working Papers 200110, School Of Economics, University College Dublin.
  4. Binder, John J, 1998. " The Event Study Methodology since 1969," Review of Quantitative Finance and Accounting, Springer, vol. 11(2), pages 111-37, September.
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Cited by:
  1. Edward Nissan & Shahdad Naghshpour, 2014. "Comparing U.S. regions for selected economic and financial variables," Journal of Economics and Finance, Springer, vol. 38(3), pages 528-540, July.

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