Trade Effects of EMU in Long-run: A Country-level Study

摘要

This article investigates the impacts of EMU on inter-eurozone trade in a medium- to long-run horizon. The core objective is twofold: first to understand if the inception of EMU has boosted trade among its member states or not, and second to investigate the impact of EMU on each individual member state. To this aim, a balanced panel of 17 OECD countries/unions (euro-12 plus five similar European economies) over 1990-2009 was constructed. Using a gravity type of specification and Pesaran’s CCE estimator, it is found that overall EMU has increased inter-eurozone trade by not more than 4.3%. Taking country specific estimates into consideration, I find that the impact of EMU on inter-eurozone trade is non-significant for four of the eurozone economies. This is while Spain and Austria seem to realize double-digit gains in trade as a result of joining the EMU.