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EU Enlargement and Trade Integration: Lessons from a Gravity Model
Author(s) -
Bussière Matthieu,
Fidrmuc Jarko,
Schnatz Bernd
Publication year - 2008
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/j.1467-9361.2008.00472.x
Subject(s) - resizing , gravity model of trade , international economics , scope (computer science) , economics , international trade , benchmark (surveying) , bilateral trade , economic integration , regional integration , european union , geography , china , geodesy , computer science , archaeology , programming language
The authors estimate gravity models using a large panel of bilateral trade flows across 61 countries between 1980 and 2003, which are applied as a benchmark for the integration of Central and South Eastern European countries with the euro area. They show that a careful examination of the fixed effects of the model is crucial for the proper interpretation of the results. The results suggest that trade integration between most new EU member states and the euro area is already relatively advanced, while the remaining Central and Eastern European countries have significant scope to strengthen trade links with the euro area.