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EMU Effects on International Trade and Investment

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Author Info

  • Flam, Harry

    () (Institute for International Economic Studies, Stockholm University)

  • Jansson, Per

    (Sveriges Riksbank)

Abstract

The partial effect of nominal exchange rate volatility on exports from each EMU member to the rest of the EMU is estimated on annual data for 1967-1997, using modern time series methods. The long run relations between exchange rate volatility and exports are mostly negative and in several cases insignificantly different from zero. Thus, these estimates do not provide much support for the hypothesis that the elimination of nominal exchange rate volatility will significantly increase trade within the EMU. However, the EMU will presumably lead to geographical concentration of production and therefore indirectly to increased trade within the EMU and – during a transitional stage – to increased foreign direct investment, both within the EMU and between the EMU and the rest of the world.

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Bibliographic Info

Paper provided by Stockholm University, Institute for International Economic Studies in its series Seminar Papers with number 683.

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Length: 50 pages
Date of creation: 01 Jun 2000
Date of revision:
Handle: RePEc:hhs:iiessp:0683

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Postal: Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden
Phone: +46-8-162000
Fax: +46-8-161443
Web page: http://www.iies.su.se/
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Keywords: trade; exchange rates; monetary union;

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References

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Cited by:
  1. Lars Calmfors, 2001. "Wages and Wage-Bargaining Institutions in the EMU – A Survey of the Issues," Empirica, Springer, vol. 28(4), pages 325-351, December.
  2. Wyplosz, Charles, 2001. "Exchange Rate Regimes: Some Lessons from Postwar Europe," CEPR Discussion Papers 2723, C.E.P.R. Discussion Papers.
  3. Calmfors, Lars, 2001. "Wages and wage-bargaining institutions in the EMU – a survey of the issues," Seminar Papers 690, Stockholm University, Institute for International Economic Studies.
  4. Ettore Dorrucci & Marcel Fratzscher & Francesco Paolo Mongelli & Stefano Firpo, 2002. "European Integration: what lessons for other regions? The case of Latin America," Working Paper Series 185, European Central Bank.

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