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Measuring the trade effects of the euro in Central and Eastern Europe

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  • Andrzej Cieślik
  • Jan Jakub Michałek
  • Jerzy Mycielski

Abstract

We study trade effects of the euro adoption in Central and Eastern Europe (CEE). We employ a gravity model that controls for an extended set of trade theory and policy variables. The gravity model is estimated using the panel data approach on a sample of Organisation for Economic Co-operation and Development (OECD) and CEE countries trading with the rest of the world during the period 1993--2008. We find that the adoption of the euro results in trade expansion for the CEE countries. This result is driven by elimination of exchange rate volatility and accession to the European Economic and Monetary Union (EMU). However, our forecasts show that this effect is short-lived.

Suggested Citation

  • 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.
    • Handle: RePEc:taf:jitecd:v:21:y:2012:i:1:p:25-49
    DOI: 10.1080/09638199.2012.642527
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    References listed on IDEAS

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    1. Vicarelli, Claudio & De Santis, Roberta & De Nardis, Sergio, 2008. "The Single Currency's Effects on Eurozone Sectoral Trade: Winners and Losers?," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 2, pages 1-34.
    2. Maryla Maliszewska, 2004. "New Member States' Trading Potential Following EMU Accession: A Gravity Approach," CASE Network Studies and Analyses 0286, CASE-Center for Social and Economic Research.
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    Cited by:

    1. Isaac Mensah, 2017. "The Euro's effect on trade: An analysis of “old" and “new" EMU members," FIW Working Paper series 179, FIW.
    2. Maria Mercè Clop-Gallart & María Isabel Juárez & Montserrat Viladrich-Grau, 2021. "Has the euro been fattening the European pig meat trade?," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(12), pages 500-510.
    3. 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.
    4. 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.
    5. Andrew K. Rose, 2017. "Why do Estimates of the EMU Effect on Trade Vary so Much?," Open Economies Review, Springer, vol. 28(1), pages 1-18, February.
    6. Cieślik, Andrzej & Turgut, Mehmet Burak, 2021. "Fiscal harmonization in view of the Euro adoption: Economic implications for Poland," Journal of Policy Modeling, Elsevier, vol. 43(2), pages 394-415.
    7. Cieślik Andrzej & Michałek Jan & Michałek Anna, 2014. "Does the Common Currency Increase Exports? Evidence from Firm-Level Data," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 41(1), pages 8-22, March.
    8. Mohd Hussain Kunroo & Irfan Ahmad Sofi & Naushad Ali Azad, 2016. "Trade implications of the Euro in EMU countries: a panel gravity analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(2), pages 391-413, May.
    9. Tang, Donny, 2016. "Has the Financial Integration affected the European Union (EU) trade with the New Member Countries from Central and Eastern Europe (CEEC) during 1994–2013?," The Journal of Economic Asymmetries, Elsevier, vol. 13(C), pages 8-20.
    10. Isaac Mensah, 2019. "The euro's effect on trade: an analysis of "old" and "new" EMU members," Review of Economics and Institutions, Università di Perugia, vol. 10(1).

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