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The single currency’s effects on Eurozone sectoral trade: winners and losers?

Author

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  • Sergio de Nardis

    (ISAE - Institute for Studies and Economic Analyses)

  • Roberta De Santis

    (ISAE - Institute for Studies and Economic Analyses)

  • Claudio Vicarelli

    (ISAE - Institute for Studies and Economic Analyses)

Abstract

In this paper we study the effect of the single currency across industries for Euro Area members. This analysis may help to shed light on the main factors influencing the euro effect on trade flows. We intend to verify whether these factors are specific to individual sectors and/or countries or common to the entire euro area We use a dynamic specification of an augmented gravity equation. Following the most recent econometric literature, we apply a “System GMM” dynamic panel data estimator (Blundell and Bond, 1998) to avoid inconsistency and biases in the estimates, and introduce controls for heterogeneity . Our preliminary results indicate some heterogeneity at country level. Despite statistically pro-trade effects in the majority of the EMU members, at sectoral level there are some countries in which the impact of the euro has been negative. The pro trade effects are mainly concentrated in scale intensive industries. Industrial specialization and location of these industries, together with other factors (i.e. differences in factor endowments, product regulations across countries), may have determined “the winners and the losers” in the monetary integration process. These preliminary findings are in line with those of the few other studies on this issue. In particular, this recent literature seems consistent with Baldwin’s (2006) “new good” hypothesis. However, in our estimates the magnitude of these effects are lower, probably because of our empirical strategy. Moreover, the sector/country analysis points out that other specific factors have been in place in shaping differently the euro effect on trade.

Suggested Citation

  • Sergio de Nardis & Roberta De Santis & Claudio Vicarelli, 2007. "The single currency’s effects on Eurozone sectoral trade: winners and losers?," ISAE Working Papers 88, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
  • Handle: RePEc:isa:wpaper:88
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    References listed on IDEAS

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    1. Sergio de Nardis & Roberta De Santis & Claudio Vicarelli, 2008. "The Euro's Effects on Trade in a Dynamic Setting," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 5(1), pages 73-85, June.
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    Cited by:

    1. Andrzej Cieślik & Jan Jakub Michałek & Jerzy Mycielski, 2012. "Measuring the trade effects of the euro in Central and Eastern Europe," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(1), pages 25-49, November.
    2. Glick, Reuven & Rose, Andrew K., 2016. "Currency unions and trade: A post-EMU reassessment," European Economic Review, Elsevier, vol. 87(C), pages 78-91.
    3. Roberta De Santis, 2012. "Impact of Environmental Regulations on Trade in the Main EU Countries: Conflict or Synergy?," The World Economy, Wiley Blackwell, vol. 35(7), pages 799-815, July.
    4. Jan Zilinsky, 2009. "What Determines Borrowing Costs of EU Countries," Working and Discussion Papers WP 4/2009, Research Department, National Bank of Slovakia.
    5. Sergio de Nardis & Carmine Pappalardo & Claudio Vicarelli, 2008. "The Euro adoption’s impact on extensive and intensive margins of trade: the Italian case," ISAE Working Papers 101, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
    6. Caporale, Guglielmo Maria & De Santis, Roberta & Girardi, Alessandro, 2015. "Trade intensity and output synchronisation: On the endogeneity properties of EMU," Journal of Financial Stability, Elsevier, vol. 16(C), pages 154-163.
    7. Tomáš Havránek, 2010. "Rose effect and the euro: is the magic gone?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(2), pages 241-261, June.
    8. Enrico D'Elia & Roberta De Santis, 2018. "Growth divergence and income inequality in OECD countries:the role of trade and financial openness," Working Papers 5, Department of the Treasury, Ministry of the Economy and of Finance.
    9. Kenan Bagci, 2013. "Export behavior of German SMEs in the Eurozone," International Economics and Economic Policy, Springer, vol. 10(4), pages 613-629, December.
    10. Sergio de Nardis & Roberta De Santis & Claudio Vicarelli, 2008. "The Euro's Effects on Trade in a Dynamic Setting," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 5(1), pages 73-85, June.
    11. Claudio, Vicarelli & Carmine, Pappalardo, 2012. "Euro introduction and export behaviour of Italian firms," MPRA Paper 43386, University Library of Munich, Germany.
    12. Tomáš Havránek, 2009. "Rose Effect and the Euro: The Magic is Gone," Working Papers IES 2009/20, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Aug 2009.
    13. Christodoulopoulou, Styliani, 2010. "THE Effects of Multilateral Trade Liberalization on the Extensive and the Intensive Margins of Trade," MPRA Paper 29169, University Library of Munich, Germany.
    14. Carmine PappalardoBy & Claudio Vicarelli, 2017. "Euro introduction and the behaviour of Italian exporting firms," Oxford Economic Papers, Oxford University Press, vol. 69(4), pages 1054-1077.
    15. Roberta De Santis & Tatiana Cesaroni, 2016. "Current Account ‘Core–Periphery Dualism’ in the EMU," The World Economy, Wiley Blackwell, vol. 39(10), pages 1514-1538, October.
    16. Aristovnik, Aleksander & Matevz, Meze, 2009. "The Economic and Monetary Union’s effect on (international) trade: the case of Slovenia before euro adoption," MPRA Paper 17445, University Library of Munich, Germany.
    17. Guglielmo Maria Caporale & Thouraya Hadj Amor & Christophe Rault, 2011. "Sources of Real Exchange Rate Volatility and International Financial Integration: A Dynamic GMM Panel Approach," CESifo Working Paper Series 3645, CESifo.
    18. Gianluigi Nocella, 2015. "Competitività e distribuzione funzionale nell'Eurozona," a/ Working Papers Series 1504, Italian Association for the Study of Economic Asymmetries, Rome (Italy).
    19. Lavinia Rotili, 2014. "The Euro effects on intermediate and final exports," Working Papers 7/14, Sapienza University of Rome, DISS.
    20. Guglielmo Maria Caporale & Thouraya Hadj Amor & Christophe Rault, 2014. "Sources Of Real Exchange Rate Volatility And International Financial Integration: A Dynamic Generalised Method Of Moments Panel Approach," Journal of International Development, John Wiley & Sons, Ltd., vol. 26(6), pages 810-820, August.

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    More about this item

    Keywords

    International Trade; Currency Unions; Gravity models; Dynamic Panel Data Models; Bludell-Bond Estimates;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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