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The Impact Of The Common Currency On Exports Of New Emu Members: Firm-Level Evidence For Slovenia And Slovakia


  • Andrzej Cieslik

    (University of Warsaw, Poland)

  • Jan Michalek

    () (University of Warsaw, Poland)

  • Anna Michalek

    (University of Warsaw, Poland)


There are many studies aiming at estimation of aggregate trade effects of the euro adoption by the old EU countries, which are based on the augmented gravity model. In contrast to the existing literature, we investigate whether the adoption of the common currency increases the export activity of individual firms. In particular, we refer to the new strand in the trade theory literature, based on the Melitz (2003) model, in which export performance depends on labor productivity and costs of exporting. There are already many empirical studies, based on firm level data, showing the relevance of the Melitz (2003) model. Most of those studies demonstrate that export performance positively depends on firms’ characteristics such as labor productivity, spending on R&D, age of the firm, the stock of human capital or propensity to innovate, but they do not take into account the impact of the common currency on the cost of exporting. There are only few studies analyzing trade implications of euro adoption for firms’ exports of “old EU” members. In our empirical paper we use the firm level data basis set up by the EBRD and the World Bank for Central and Eastern European Countries. Using the probit model, we analyze whether the accession of Slovenia and Slovakia to the Eurozone did increase the firms’ propensity to export in those countries.

Suggested Citation

  • 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. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 8(4), pages 7-23, December.
  • Handle: RePEc:pes:ierequ:v:8:y:2013:i:4:p:7-23

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    References listed on IDEAS

    1. Alejandro Micco & Ernesto H. Stein & Guillermo Luis Ordoñez, 2003. "The Currency Union Effect on Trade: Early Evidence from EMU," Research Department Publications 4339, Inter-American Development Bank, Research Department.
    2. Andrzej Cieślik & Jan Jakub Michałek & Jerzy Mycielski, 2012. "Measuring the trade effects of the euro in Central and Eastern Europe," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(1), pages 25-49, November.
    3. Aristovnik, Aleksander & Matevz, Meze, 2009. "The Economic and Monetary Union’s effect on (international) trade: the case of Slovenia before euro adoption," MPRA Paper 17445, University Library of Munich, Germany.
    4. Andrzej Cieślik & Jan Michałek & Anna Michałek, 2012. "Export Activity in Visegrad-4 Countries: Firm Level Investigation," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 30.
    5. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    6. Andrew K. Rose, 2000. "One money, one market: the effect of common currencies on trade," Economic Policy, CEPR;CES;MSH, vol. 15(30), pages 7-46, April.
    7. Ansgar Belke & Julia Spies, 2008. "Enlarging the EMU to the east: what effects on trade?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 35(4), pages 369-389, September.
    8. Berger, Helge & Nitsch, Volker, 2008. "Zooming out: The trade effect of the euro in historical perspective," Journal of International Money and Finance, Elsevier, vol. 27(8), pages 1244-1260, December.
    9. Lionel Fontagné & Thierry Mayer & Gianmarco Ottaviano, 2009. "Of markets, products and prices: The effects of the euro on European firms," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 44(3), pages 149-158, May.
    10. repec:spo:wpecon:info:hdl:2441/10221 is not listed on IDEAS
    11. Alejandro Micco & Ernesto Stein & Guillermo Ordoñez, 2003. "The currency union effect on trade: early evidence from EMU," Economic Policy, CEPR;CES;MSH, vol. 18(37), pages 315-356, October.
    12. Andrzej Cieślik & Jan, Jakub Michałek & Jerzy Mycielski, 2012. "Consequences of the euro adoption by Central and Eastern European (CEE) countries for their trade flows," NBP Working Papers 118, Narodowy Bank Polski, Economic Research Department.
    13. David Barr & Francis Breedon & David Miles, 2003. "Life on the outside: economic conditions and prospects outside euroland," Economic Policy, CEPR;CES;MSH, vol. 18(37), pages 573-613, October.
    14. Nicolas Berman & Philippe Martin & Thierry Mayer, 2009. "How do Different Exporters React to Exchange Rate Changes? Theory, Empirics and Aggregate Implications," Working Papers 2009-32, CEPII research center.
    15. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    16. Brouwer, Jelle & Paap, Richard & Viaene, Jean-Marie, 2008. "The trade and FDI effects of EMU enlargement," Journal of International Money and Finance, Elsevier, vol. 27(2), pages 188-208, March.
    17. Frankel, Jeffrey, 2008. "Should Eastern European Countries Join the Euro? A Review and Update of Trade Estimates and Consideration of Endogenous OCA Criteria," Working Paper Series rwp08-059, Harvard University, John F. Kennedy School of Government.
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    Cited by:

    1. Piotr Gabrielczak & Tomasz Serwach, 2017. "Does the euro increase the complexity of exported goods? The case of Estonia," Lodz Economics Working Papers 4/2017, University of Lodz, Faculty of Economics and Sociology.
    2. Piotr Gabrielczak & Tomasz Serwach, 2017. "The impact of the euro adoption on the complexity of goods in Slovenian exports," Lodz Economics Working Papers 3/2017, University of Lodz, Faculty of Economics and Sociology.
    3. repec:rfe:zbefri:v:35:y:2017:i:1:p:45-71 is not listed on IDEAS

    More about this item


    common currency; export; new EMU members;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions


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