EMU impact of on third countries’ exports. A gravity approach
AbstractIn this article we explore the impact of the euro adoption and the effect of the volatility of the real exchange rate on trade both on intra EMU trade and on EMU trade with third countries. To this end, we use a large database covering 93% of world trade that includes 80 countries during the period 1980-2009. We estimate a gravity equation using one of the most complete specifications in the literature to isolate the euro effect from other factors affecting trade, as regional trade agreements or exchange rate volatility. Our results show that the elimination of the volatility boosted export per se especially before 1999 and therefore, the possibility to peg to the euro could boost trade of third countries and between these third countries.
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Bibliographic InfoPaper provided by Department of Economic Theory and Economic History of the University of Granada. in its series ThE Papers with number 10/26.
Length: 30 pages
Date of creation: 25 May 2012
Date of revision:
Gravity equation; International trade; Exchange rate;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-05 (All new papers)
- NEP-EEC-2012-06-05 (European Economics)
- NEP-INT-2012-06-05 (International Trade)
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