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Enlarging the EMU to the East: What Effects on Trade?

  • Belke, Ansgar

    ()

    (University of Duisburg-Essen)

  • Spies, Julia

    ()

    (Institut für Angewandte Wirtschaftsforschung (IAW))

The purpose of this paper is to assess the implications of the Economic and Monetary Union (EMU) accession of eight Central and Eastern European Countries (CEECs) on their share in EMU-12 imports. Overcoming biases related to endogeneity, omitted variables and sample selection, our results indicate that the common currency has boosted intra-EMU imports by 7%. Under the assumption that the same relationship between the explanatory variables and imports will hold for EMU-CEEC trade, we are able to predict the future impact of the Euro. Our findings suggest that except for the least integrated countries, Poland, Latvia and Lithuania, all CEECs can expect increases in the EMU-12 import share.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3647.

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Length: 44 pages
Date of creation: Aug 2008
Date of revision:
Publication status: published in: Empirica, 2008, 35 (4), 369-389
Handle: RePEc:iza:izadps:dp3647
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  1. Maryla Maliszewska, 2004. "New Member States' Trading Potential Following EMU Accession: A Gravity Approach," CASE Network Studies and Analyses 0286, CASE-Center for Social and Economic Research.
  2. Tamim Bayoumi & Barry Eichengreen, 1992. "Shocking Aspects of European Monetary Unification," NBER Working Papers 3949, National Bureau of Economic Research, Inc.
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