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Enlarging the EMU to the East: What Effects on Trade?

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  • Belke, Ansgar

    ()
    (University of Duisburg-Essen)

  • Spies, Julia

    ()
    (Institut für Angewandte Wirtschaftsforschung (IAW))

Abstract

The purpose of this paper is to assess the implications of the Economic and Monetary Union (EMU) accession of eight Central and Eastern European Countries (CEECs) on their share in EMU-12 imports. Overcoming biases related to endogeneity, omitted variables and sample selection, our results indicate that the common currency has boosted intra-EMU imports by 7%. Under the assumption that the same relationship between the explanatory variables and imports will hold for EMU-CEEC trade, we are able to predict the future impact of the Euro. Our findings suggest that except for the least integrated countries, Poland, Latvia and Lithuania, all CEECs can expect increases in the EMU-12 import share.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3647.

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Length: 44 pages
Date of creation: Aug 2008
Date of revision:
Publication status: published in: Empirica, 2008, 35 (4), 369-389
Handle: RePEc:iza:izadps:dp3647

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Keywords: Euro area enlargement; Central and Eastern European countries; gravity model; panel estimation;

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Cited by:
  1. Rainer Schweickert & Inna Melnykovska & Ansgar Belke & Ingo Bordon, 2011. "Prospective NATO or EU membership and institutional change in transition countries," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 19(4), pages 667-692, October.
  2. Mitze, Timo & Alecke, Björn & Untiedt, Gerhard, 2008. "Trade, FDI and Cross-Variable Linkages: A German (Macro-)Regional Perspective," MPRA Paper 12245, University Library of Munich, Germany.
  3. Mitze, Timo, 2010. "Estimating Gravity Models of International Trade with Correlated Time-Fixed Regressors: To IV or not IV?," MPRA Paper 23540, University Library of Munich, Germany.
  4. Timo Mitze & Björn Alecke & Gerhard Untiedt, 2009. "Trade-FDI Linkages in a System of Gravity Equations for German Regional Data," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0084, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  5. Andrzej Cieslik, Jan Michalek, Anna Michalek, 2013. "The Impact of the Common Currency on Exports of New EMU Members: Firm-level Evidence for Slovenia and Slovakia," Equilibrium, Uniwersytet Mikolaja Kopernika, vol. 8, pages 7-23.
  6. Ansgar Belke & Ingo Bordon & Inna Melnykovska & Rainer Schweickert, 2009. "Prospective Membership and Institutional Change in Transition Countries," Kiel Working Papers 1562, Kiel Institute for the World Economy.
  7. Timo Mitze, 2009. "Endogeneity in Panel Data Models with Time-Varying and Time-Fixed Regressors: To IV or not IV?," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0083, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  8. Fritz Breuss, 2009. "An evaluation of the EU's Fifth Enlargement With special focus on Bulgaria and Romania," European Economy - Economic Papers, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission 361, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
  9. Mihai Rebiga, 2010. "Is Romania Ready for Adopting Euro?," Studies and Scientific Researches. Economics Edition, "Vasile Alecsandri" University of Bacau, Faculty of Economic Sciences, "Vasile Alecsandri" University of Bacau, Faculty of Economic Sciences, issue 15.
  10. Matthieu Bussière & Jarko Fidrmuc & Bernd Schnatz, 2008. "EU Enlargement and Trade Integration: Lessons from a Gravity Model," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 12(3), pages 562-576, 08.
  11. Fritz Breuss, 2007. "A Prototype Model of EU's 2007 Enlargement," FIW Working Paper series, FIW 007, FIW.
  12. Andrzej Cieslik, Jan Jakub Michalek, Jerzy Mycielski, 2012. "Euro and Trade Flows in Central Europe," Equilibrium, Uniwersytet Mikolaja Kopernika, vol. 7, pages 7-25.
  13. Zaenal Mutaqin & Masaru Ichihashi, 2013. "Widening and Deepening Economic Integration Impact on Bilateral Trade in the Eurozone and ASEAN," IDEC DP2 Series 3-3, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
  14. Jungmittag, Andre, 2014. "Der Trade-off zwischen deutschen Direktinvestitionen und Exporten: Wie wichtig sind die verschiedenen Dimensionen der Distanz?," Working Paper Series: Business and Law 04, Frankfurt University of Applied Sciences, Faculty of Business and Law.
  15. Breusch, Trevor & Ward, Michael B & Nguyen, Hoa & Kompas, Tom, 2010. "On the fixed-effects vector decomposition," MPRA Paper 21452, University Library of Munich, Germany.
  16. Estrella Gómez & Juliette Milgram Baleix, 2012. "EMU impact of on third countries’ exports. A gravity approach," ThE Papers, Department of Economic Theory and Economic History of the University of Granada. 10/26, Department of Economic Theory and Economic History of the University of Granada..

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