Regional Single Currency Effects on Bilateral Trade with the European Union
The regional effects of sharing a single currency on bilateral trade with other European Union member states are a contentious question. This paper examines the regional effects on trade of the set up of the euro as a common currency. It takes advantage of a gravity specification of bilateral trade between the seventeen Spanish regions and EU-13 countries over the period 1997-2004 and accounts for two distinct effects depending on the temporal set up of the euro. That is, the exchange rate volatility effect (from exchange rate fixing of national currencies in 1999) is distinguished from the so-called common currency effect (resulting from the issuing of a new currency in 2002). Findings are suggestive of a regional concentration of currency union effects in a few regions, namely those relatively more open to trade, though such effects are found to fade away over time. Trade expansion for the set up of the euro ranges between 45 to 16% depending on the specification, but only the exchange rate volatility effect of a common currency was found significant, pure currency union effects were instead found to be almost negligible.
|Date of creation:||01 Oct 2010|
|Date of revision:|
|Contact details of provider:|| Web page: http://www2.lse.ac.uk/europeanInstitute|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004.
"Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development,"
Journal of Economic Growth,
Springer, vol. 9(2), pages 131-165, 06.
- Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," CEPR Discussion Papers 3643, C.E.P.R. Discussion Papers.
- Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2002. "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development," NBER Working Papers 9305, National Bureau of Economic Research, Inc.
- Spiros Bougheas & Panicos Demetriades & Edgar Morgenroth, 1996.
"Infrastructure, Transport Costs and Trade,"
Keele Department of Economics Discussion Papers (1995-2001)
96/7, Department of Economics, Keele University.
- Sergio de Nardis & Claudio Vicarelli, 2003. "The Impact of Euro on Trade: The (Early) Effect is not so Large," ISAE Working Papers 31, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
- Ernst Fehr & Jean-Robert Tyran, .
"Does Money Illusion Matter?,"
IEW - Working Papers
012, Institute for Empirical Research in Economics - University of Zurich.
- Emla Fitzsimons & Vincent Hogan & J. Peter Neary, 1999.
"Explaining the Volume of North-South Trade in Ireland - A Gravity Model Approach,"
The Economic and Social Review,
Economic and Social Studies, vol. 30(4), pages 381-401.
- Fitzsimons, E. & Hogan, V. & Neary, J.P., 1999. "Explaining the volume of North-South Trade in Ireland: a Gravity Model Approach," Papers 99/14, College Dublin, Department of Political Economy-.
- Catalina Amuedo-Dorantes & Mark Wheeler, 2001. "An empirical analysis of the European Union's impact on Spanish economic performance," Applied Economics, Taylor & Francis Journals, vol. 33(8), pages 1001-1008.
- Jeffrey A. Frankel, 2003.
"Experience of and Lessons from Exchange Rate Regime in Emerging Economies,"
NBER Working Papers
10032, National Bureau of Economic Research, Inc.
- Frankel, Jeffrey, 2003. "Experience of and Lessons from Exchange Rate Regimes in Emerging Economies," Working Paper Series rwp03-011, Harvard University, John F. Kennedy School of Government.
When requesting a correction, please mention this item's handle: RePEc:erp:leqsxx:p0026. 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: (Katjana Gattermann)
If references are entirely missing, you can add them using this form.