IDEAS home Printed from https://ideas.repec.org/p/ecb/ecbwps/20172046.html
   My bibliography  Save this paper

Home sweet home: the home bias in trade in the European Union

Author

Listed:
  • Mika, Alina

Abstract

This study examines the home bias in trade in goods and services within the European Union. Using the newest release of the World Input Output database, available for the years 2000-2014, the effect is estimated using gravity regressions. The trade-reducing effect of borders is found to be sizeable. It is greater for trade in services than for goods, though the former declined more markedly throughout the period. The paper extends current literature by demonstrating and analysing the variation in the bias across Europe. The border effect is larger in Central and Eastern Europe than in other parts of the continent. The differences in the effect can be largely explained by the depth of a country’s integration with the European Union. The number of years passed since a country joined the EU has a significant impact on the bias. The longer a country has been in the EU, the lower its home bias, with the first years of membership having the largest (in absolute terms) effect. JEL Classification: F02, F15, F14

Suggested Citation

  • Mika, Alina, 2017. "Home sweet home: the home bias in trade in the European Union," Working Paper Series 2046, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20172046
    Note: 2654369
    as

    Download full text from publisher

    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2046.en.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. M. Manchin & AM. Pinna, 2003. "Border effects in the enlarged EU area," Working Paper CRENoS 200301, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    2. repec:bla:worlde:v:8:y:1985:i:2:p:171-182 is not listed on IDEAS
    3. Gerhard Streicher & Robert Stehrer, 2015. "Whither Panama? Constructing A Consistent And Balanced World Sut System Including International Trade And Transport Margins," Economic Systems Research, Taylor & Francis Journals, vol. 27(2), pages 213-237, June.
    4. 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.
    5. Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, August.
    6. Chen, Natalie, 2004. "Intra-national versus international trade in the European Union: why do national borders matter?," Journal of International Economics, Elsevier, vol. 63(1), pages 93-118, May.
    7. Narcissa Balta & Juan Delgado, 2009. "Home Bias and Market Integration in the EU," CESifo Economic Studies, CESifo, vol. 55(1), pages 110-144, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Enrique Moral-Benito & Francesca Viani, 2017. "An anatomy of the spanish current account adjustment: the role of permanent and transitory factors," Working Papers 1737, Banco de España;Working Papers Homepage.

    More about this item

    Keywords

    border effect; European Union; gravity; trade;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F15 - International Economics - - Trade - - - Economic Integration
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecb:ecbwps:20172046. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Official Publications). General contact details of provider: http://edirc.repec.org/data/emieude.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.