IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/43386.html
   My bibliography  Save this paper

Euro introduction and export behaviour of Italian firms

Author

Listed:
  • Claudio, Vicarelli
  • Carmine, Pappalardo

Abstract

Recent literature has focused on the importance of extensive and intensive margins of trade in the case of the Euro adoption. Using a unique dataset taken from ISTAT firm level data, we study the effects of euro introduction on Italian manufacturing firms. We focus our analysis on the period 1996-2004, covering three years before and six years after the euro introduction. We estimate a gravity equation using difference-in difference estimation techniques. Firm-level evidence shows that the euro had indeed a positive influence on Italian exports, mainly channelled through the intensive margin, whereas the extensive margin was not significantlyimportant. This result suggests that the positive effect of euro introduction on trade flows is essentially owed to a reduction of variable trade costs. The reduction of fixed-entry costs would have a role, allowing the entry of new exporting firms in foreign markets. However, these latter are smaller and less productive and exporting a small number of products; as a result, their contribution to total export value is quite low. This result seems in line with the well known stylised fact on small average size of Italian firms. The lower is the average firm size, the lower is the probability to benefit of a downward shift of fixed entry costs in foreign markets induced by the common currency.

Suggested Citation

  • Claudio, Vicarelli & Carmine, Pappalardo, 2012. "Euro introduction and export behaviour of Italian firms," MPRA Paper 43386, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:43386
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/43386/1/MPRA_paper_43386.pdf
    File Function: original version
    Download Restriction: no

    File URL: https://mpra.ub.uni-muenchen.de/43472/1/MPRA_paper_43472.pdf
    File Function: revised version
    Download Restriction: no

    References listed on IDEAS

    as
    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.
    2. Gabriel J Felbermayr & Wilhelm Kohler, 2014. "Exploring the Intensive and Extensive Margins of World Trade," World Scientific Book Chapters,in: European Economic Integration, WTO Membership, Immigration and Offshoring, chapter 4, pages 115-148 World Scientific Publishing Co. Pte. Ltd..
    3. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
    4. Davide Castellani & Francesco Serti & Chiara Tomasi, 2008. "Firms in International Trade: Importers and Exporters Heterogeneity in the Italian Manufacturing Industry," LEM Papers Series 2008/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Raj Chetty & John N. Friedman & Nathaniel Hilger & Emmanuel Saez & Diane Whitmore Schanzenbach & Danny Yagan, 2011. "How Does Your Kindergarten Classroom Affect Your Earnings? Evidence from Project Star," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 1593-1660.
    6. Gabriel Felbermayr & Wilhelm Kohler, 2007. "Does WTO Membership Make a Difference at the Extensive Margin of World Trade?," CESifo Working Paper Series 1898, CESifo Group Munich.
    7. Vicarelli, Claudio & De Santis, Roberta & De Nardis, Sergio, 2008. "The Single Currency's Effects on Eurozone Sectoral Trade: Winners and Losers?," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 2, pages 1-34.
    8. Richard E. Baldwin & Virginia Di Nino, 2006. "Euros and Zeros: The Common Currency Effect on Trade in New Goods," NBER Working Papers 12673, National Bureau of Economic Research, Inc.
    9. 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.
    10. Antoine Berthou & Lionel Fontagné, 2008. "The Euro and the Intensive and Extensive Margins of Trade: Evidence from French Firm Level Data," Working Papers 2008-06, CEPII research center.
    11. Keith Walsh, 2006. "Trade in Services: Does Gravity Hold? A Gravity Model Approach to Estimating Barriers to Services Trade," The Institute for International Integration Studies Discussion Paper Series iiisdp183, IIIS.
    12. Antoine Berthou & Lionel Fontagné, 2013. "How do Multiproduct Exporters React to a Change in Trade Costs?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(2), pages 326-353, April.
    13. Baldwin, Richard E. & Skudelny, Frauke & Taglioni, Daria, 2005. "Trade effects of the euro: evidence from sectoral data," Working Paper Series 446, European Central Bank.
    14. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 441-487.
    15. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    16. Besedes, Tibor & Prusa, Thomas J., 2011. "The role of extensive and intensive margins and export growth," Journal of Development Economics, Elsevier, vol. 96(2), pages 371-379, November.
    17. Sergio de Nardis & Carmine Pappalardo, 2009. "Export, Productivity and Product Switching: The Case of Italian Manufacturing Firms," ISAE Working Papers 110, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
    18. repec:lmu:muenar:20646 is not listed on IDEAS
    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. Valeria Gattai, 2015. "Internationalisation and performance at the firm-level: what we learn from Italy," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(4), pages 475-509, December.
    2. Valeria Gattai, 2015. "Foreign exposure and heterogeneous performance of Italian firms: A survey of the empirical literature (1992-2014)," Working Papers 300, University of Milano-Bicocca, Department of Economics, revised Apr 2015.
    3. repec:eee:iburev:v:26:y:2017:i:3:p:476-490 is not listed on IDEAS

    More about this item

    Keywords

    Trade; Euro; Export Margins; Instrumental variables;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

    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:pra:mprapa:43386. 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: (Joachim Winter) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/vfmunde.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.