Trade Effects of EMU in Long-run: A Country-level StudyPayam Hashemi*
Department of Economics, University of Southern California.
- *Corresponding Author:
- Payam Hashemi
Department of Economics
University of Southern California
E-mail: [email protected]
Received Date: June 29, 2016; Accepted Date: August 11, 2016; Published Date: August 16, 2016
Citation: Hashemi P (2016) Trade Effects of EMU in Long-run: A Countrylevel Study. J Glob Econ 4:208. doi: 10.4172/2375-4389.1000208
Copyright: © 2016 Hashemi P. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
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.