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Impact of Single Currency Adoption on Trade Flows: The Panel Data Evidence

Author

Listed:
  • Mohd Hussain Kunrooa

    (Department of Economics, Jamia Millia Islamia University, New Delhi, India.
    Intern, Trade policy Division, Ministry of Commerce and Industry, New Delhi, India.)

  • Naushad Ali Azad

    (Department of Economics, Jamia Millia Islamia University, New Delhi, India.)

Abstract

Purpose: In this study, we investigate the trade effects of the Euro on European Economic and Monetary Union (EMU) countries from 1994 to 2011 by adopting the gravity model of international trade. Methodology- We implement panel data econometric technique of Hausman and Taylor (1981) estimator to characterize bilateral trade and export flows. Findings- The results of Hausman and Taylor estimator exhibit that the bilateral trade and exports of the EMU economies increase by about 12% and 7%, respectively, when both the countries use the euro as its currency. Recommendations- The reported results have important policy implication for the countries considering joining the euro

Suggested Citation

  • Mohd Hussain Kunrooa & Naushad Ali Azad, 2015. "Impact of Single Currency Adoption on Trade Flows: The Panel Data Evidence," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(9), pages 433-439, September.
    • Handle: RePEc:ijr:journl:v:3:y:2015:i:9:p:433-439
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Bilateral Trade; Euro; Currency Union; Panel Data; Gravity model; HT Estimator;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F15 - International Economics - - Trade - - - Economic Integration
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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