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The European single market and intra-EU trade: An assessment with heterogeneity-robust difference-in-differences methods

Author

Listed:
  • Nagengast, Arne J.
  • Rios-Avila, Fernando
  • Yotov, Yoto

Abstract

We use heterogeneity-robust difference-in-differences (DiD) methods to evaluate the impact of membership in the European Union (EU) Single Market on international trade. On the policy front, we provide evidence that: (i) On average, the EU has been very effective in promoting trade among its member states; (ii) The trade effects of the EU have been long-lasting, but heterogeneous across EU cohorts; and (iii) While the EU has benefited both 'old' and 'new' members, the increase in the exports from the 'old' members to the 'new' joiners has been disproportionately larger. From a methods and practical perspective, the contribution of this paper is to introduce a new, fast, and flexible estimation command that combines leading estimation techniques from the gravity literature with recent methods from the heterogeneity-robust DiD literature.

Suggested Citation

  • Nagengast, Arne J. & Rios-Avila, Fernando & Yotov, Yoto, 2025. "The European single market and intra-EU trade: An assessment with heterogeneity-robust difference-in-differences methods," Discussion Papers 26/2025, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdps:328249
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    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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