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Euro Effects on the Intensive and Extensive Margins of Trade

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  • Harry Flam
  • Hakan Nordström

Abstract

We estimate that the euro has increased trade within the eurozone by about 26 per cent and trade between the eurozone and outsiders by about 12 per cent on average for the years 2002-2005 compared to 1995-1998. The percentage increases were smaller for products that were exported every year during the sample period than for products that were not, indicating significant and substantial effects on the extensive margin of trade. The euro effects were concentrated to semi-finished and finished products, in particular to industries with highly processed products such as pharmaceuticals and machinery.

Suggested Citation

  • Harry Flam & Hakan Nordström, 2006. "Euro Effects on the Intensive and Extensive Margins of Trade," CESifo Working Paper Series 1881, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1881
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp1881.pdf
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    References listed on IDEAS

    as
    1. Kei-Mu Yi, 2003. "Can Vertical Specialization Explain the Growth of World Trade?," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 52-102, February.
    2. Andrew K. Rose, 2001. "Currency unions and trade: the effect is large," Economic Policy, CEPR;CES;MSH, vol. 16(33), pages 449-461, October.
    3. Baldwin, Richard & Di Nino, Virginia, 2006. "Euros and Zeros: The Common Currency Effect on Trade in New Goods," CEPR Discussion Papers 5973, C.E.P.R. Discussion Papers.
    4. 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.
    5. Flam, Harry & Nordström, Håkan, 2006. "Trade Volume Effects of the Euro: Aggregate and Sector Estimates," Seminar Papers 746, Stockholm University, Institute for International Economic Studies.
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    JEL classification:

    • F10 - International Economics - - Trade - - - General

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