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Milestones of European Integration: Which matters most for Export Openness?

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  • Robinson Kruse

    () (Aarhus University, School of Economics and Management, CREATES)

  • Sanne Hiller

    (Department of Economics, Aarhus School of Business, Aarhus University)

Abstract

The European integration process has removed barriers to trade within Europe. We analyze which integration step has most profoundly influenced the trending behavior of export openness. We endogenously determine the single most decisive break in the trend, account for strong cross-country heterogeneity and propose a new measure for the strength of trend breaks. Highly open economies gain from both, monetary and real integration. In sharp contrast, less open economies do not benefit from real integration and even suffer from monetary integration. The major milestones for France, Germany, Italy and the Netherlands are the Euro introduction, the Maastricht Treaty, the Exchange Rate Mechanism I and the merge of EFTA and EEC to the European Economic Area, respectively. Our empirical results have important implications for inner-European economic development, as export openness feeds back into growth, unemployment and income convergence.

Suggested Citation

  • Robinson Kruse & Sanne Hiller, 2010. "Milestones of European Integration: Which matters most for Export Openness?," CREATES Research Papers 2010-27, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:create:2010-27
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    References listed on IDEAS

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    1. Ben-David, Dan, 1996. "Trade and convergence among countries," Journal of International Economics, Elsevier, vol. 40(3-4), pages 279-298, May.
    2. Ben-David, Dan, 2001. "Trade liberalization and income convergence: a comment," Journal of International Economics, Elsevier, vol. 55(1), pages 229-234, October.
    3. Ben-David, Dan & Papell, David H., 1997. "International trade and structural change," Journal of International Economics, Elsevier, vol. 43(3-4), pages 513-523, November.
    4. Dan Ben-David, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 653-679.
    5. Gil-Pareja, Salvador & Llorca-Vivero, Rafael & Martinez-Serrano, Jose Antonio, 2007. "Did the European exchange-rate mechanism contribute to the integration of peripheral countries?," Economics Letters, Elsevier, vol. 95(2), pages 303-308, May.
    6. Ben-David, Dan & Papell, David H., 1995. "The great wars, the great crash, and steady state growth: Some new evidence about an old stylized fact," Journal of Monetary Economics, Elsevier, vol. 36(3), pages 453-475, December.
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    Cited by:

    1. Christiane Krieger-Boden & Rüdiger Soltwedel, 2013. "Identifying European Economic Integration and Globalization: A Review of Concepts and Measures," Regional Studies, Taylor & Francis Journals, vol. 47(9), pages 1425-1442, October.
    2. Mariam Camarero & Estrella Gómez & Cecilio Tamarit, 2013. "EMU and Trade Revisited: Long-Run Evidence Using Gravity Equations," The World Economy, Wiley Blackwell, vol. 36(9), pages 1146-1164, September.
    3. Mariam Camarero & Estrella Gómez & Cecilio Tamarit, 2012. "EMU and intra-European trade. Long-run evidence using gravity equations," ThE Papers 10/25, Department of Economic Theory and Economic History of the University of Granada..

    More about this item

    Keywords

    European Integration; Export Openness; Trends; Structural Breaks;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F15 - International Economics - - Trade - - - Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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