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EMU impact of on third countries’ exports. A gravity approach

Author

Listed:
  • Estrella Gómez

    () (Universidad de Granada, Departamento de Teoría e Historia Económica)

  • Juliette Milgram Baleix

    () (Universidad de Granada, Departamento de Teoría e Historia Económica)

Abstract

In this article we explore the impact of the euro adoption and the effect of the volatility of the real exchange rate on trade both on intra EMU trade and on EMU trade with third countries. To this end, we use a large database covering 93% of world trade that includes 80 countries during the period 1980-2009. We estimate a gravity equation using one of the most complete specifications in the literature to isolate the euro effect from other factors affecting trade, as regional trade agreements or exchange rate volatility. Our results show that the elimination of the volatility boosted export per se especially before 1999 and therefore, the possibility to peg to the euro could boost trade of third countries and between these third countries.

Suggested Citation

  • Estrella Gómez & Juliette Milgram Baleix, 2012. "EMU impact of on third countries’ exports. A gravity approach," ThE Papers 10/26, Department of Economic Theory and Economic History of the University of Granada..
  • Handle: RePEc:gra:wpaper:10/26
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    File URL: http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers10_26.pdf
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    References listed on IDEAS

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    Cited by:

    1. Lavinia Rotili, 2014. "The Euro effects on intermediate and final exports," Working Papers 7/14, Sapienza University of Rome, DISS.

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    Keywords

    Gravity equation; International trade; Exchange rate;

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