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Bi- and Unilateral trade effects of joining the Euro
Journal article   Peer reviewed

Bi- and Unilateral trade effects of joining the Euro

Mario Larch, Joschka Wanner and Yoto V. Yotov
Economics letters, v 171, pp 230-234
01 Oct 2018
DOI: https://doi.org/10.1016/j.econlet.2018.08.001
Featured in Collection :   UN Sustainable Development Goals @ Drexel

Abstract

Currency unions EMU Euro effects Structural gravity models Unilateral EMU effect
We propose a simple theoretically consistent adjustment for structural gravity estimations of the EMU impact on international trade. Our methods result in two contributions to the related literature. First, we show that proper control for intra-national trade flows leads to larger, positive, and statistically significant bilateral EMU effects. The intuition is that joining the EMU promotes trade among member countries at the expense of trade diversion from domestic sales. Second, the introduction of intra-national trade flows enables us to identify Unilateral effects of joining the Euro between members and non-member countries. The unilateral effects are also positive, sizable and statistically significant. •We re-assess the bilateral Euro effect including intra-national trade flows.•This leads to larger, positive, and statistically significant bilateral EMU effects.•We also identify unilateral country-specific Euro effects.•The unilateral effects are positive, sizable and statistically significant, too.

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10 Record Views
30 citations in Web of Science
30 citations in Scopus

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UN Sustainable Development Goals (SDGs)

This publication has contributed to the advancement of the following goals:

#9 Industry, Innovation and Infrastructure
#8 Decent Work and Economic Growth

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Collaboration types
Domestic collaboration
International collaboration
Web of Science research areas
Economics
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