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Euro Adoption and Export: A Case Study of the Czech Republic, Slovakia and Old EU Member States

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  • Oliver Polyák

Abstract

The present paper is focussed on the impact of introducing the common European currency on export performance. Our objective is to explore the impact of introducing the common European currency on the export performance of Slovakia in comparison to the Czech Republic and the old EU member states. Our findings suggest that the export performance and other export-related indicators evolved largely in parallel in both countries. Positive trade effects brought about by the introduction of the euro are rather moderate - up to 5%. The results to some extent do confirm the existence of the so called "Rose effect" - the effect that two countries sharing the same currency trade more than they would otherwise.

Suggested Citation

  • Oliver Polyák, 2016. "Euro Adoption and Export: A Case Study of the Czech Republic, Slovakia and Old EU Member States," Prague Economic Papers, Prague University of Economics and Business, vol. 2016(4), pages 427-444.
  • Handle: RePEc:prg:jnlpep:v:2016:y:2016:i:4:id:568:p:427-444
    DOI: 10.18267/j.pep.568
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    References listed on IDEAS

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    1. Andrew K. Rose, 1999. "One Money, One Market: Estimating the Effect of Common Currencies on Trade," NBER Working Papers 7432, National Bureau of Economic Research, Inc.
    2. 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.
    3. Alberto Alesina & Robert J. Barro & Silvana Tenreyro, 2003. "Optimal Currency Areas," NBER Chapters, in: NBER Macroeconomics Annual 2002, Volume 17, pages 301-356, National Bureau of Economic Research, Inc.
    4. Tomáš Havránek, 2010. "Rose effect and the euro: is the magic gone?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(2), pages 241-261, June.
    5. James E. Anderson, 2011. "The Gravity Model," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 133-160, September.
    6. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    7. Fidrmuc, Jarko & Klein, Caroline & Price, Robert & Wörgötter, Andreas, 2013. "Slovakia: A Catching Up Euro Area Member In and Out of the Crisis," IZA Policy Papers 55, Institute of Labor Economics (IZA).
    8. Michael R. Pakko & Howard J. Wall, 2001. "Reconsidering the trade-creating effects of a currency union," Review, Federal Reserve Bank of St. Louis, vol. 83(May), pages 37-46.
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    More about this item

    Keywords

    Slovakia; export; euro adoption; Czech Republic; competitiveness;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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