Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2002-10-24 Number: 02-108/2 Author-Name: Maurice J.G. Bun Author-Email: m.j.g.bun@uva.nl Author-Workplace-Name: Faculty of Economics and Econometrics, University of Amsterdam Author-Name: Franc J.G.M. Klaassen Author-Email: f.j.g.m.klaassen@uva.nl Author-Workplace-Name: Faculty of Economics and Econometrics, University of Amsterdam Title: Has the Euro increased Trade? Abstract: See also 'The Euro Effect on Trade is not as Large as commonly thought' in the Oxford Bulletin of Economics and Statistics. Vol. 69, pages 473-496.

A major economic reason for the introduction of the euro was its supposedly positive effect on intra-EMU trade. Existing studies examine this suspicion indirectly using non-EMU data and report ambiguous results. We estimate the euro-effect directly from data that include EMU observations. Using a dynamic panel model for annual bilateral exports, we find that the euro has significantly increased trade, with an effect of 4% in the first year and cumulating to around 40% in the long-run. These estimates can be useful in the debates on whether to join the euro in countries such as the U.K. Classification-JEL: C23; F15; F33. Keywords: Currency union; dynamic panel data model; EMU; exports; imperfect substitutes model. File-Url: https://papers.tinbergen.nl/02108.pdf File-Format: application/pdf File-Size: 231441 bytes Handle: RePEc:tin:wpaper:20020108