The impact of EMU on trade flows
AbstractIn this paper we quantify the impact of exchange rate volatility on trade flows within the EU with the help of a gravity trade model. We consider bilateral instead of total exports, and we use panel data. Moreover, we introduce dynamics into the model, taking lagged exports as explanatory variable. The estimation of this model for the period 1962-1995 leads to significant negative coefficients for the proxy of exchange rate variability. We use these estimates to calculate the potential trade-creating effect of a monetary union, setting the exchange rate volatility equal to zero. JEL no. F15, F41, F31.
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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven in its series Open Access publications from Katholieke Universiteit Leuven with number urn:hdl:123456789/101376.
Date of creation: 2000
Date of revision:
Publication status: Published in Weltwirtschaftliches archiv-review of world economics (2000) v.136, p.381-402
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Web page: http://www.kuleuven.be
exchange-rate variability; international-trade; gravity equation; rate volatility; risk; uncertainty; growth; level;
Find related papers by JEL classification:
- F15 - International Economics - - Trade - - - Economic Integration
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- F31 - International Economics - - International Finance - - - Foreign Exchange
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