Premium
EMU and trade: A PPML re‐assessment with intra‐national trade flows
Author(s) -
EstevePérez Silviano,
GilPareja Salvador,
LlorcaVivero Rafael,
MartínezSerrano José Antonio
Publication year - 2020
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12960
Subject(s) - economics , gravity model of trade , international economics , international trade , trade barrier , microfoundations , bilateral trade , macroeconomics , geography , archaeology , china
This paper examines the EMU effect on trade for the eleven early joiners and Greece relying for the first time on data that include both international and intra‐national trade flows, in line with all the microfoundations of the structural gravity model of trade. We find that the overall EMU impact on trade is positive between its members and, specially, for trade between members and non‐members. Interestingly, we further show that the effect of the EMU on bilateral trade remarkably differs across countries. For Ireland, Belgium–Luxembourg, Spain, Portugal and Austria, we find robust evidence that EMU has boosted trade both with other members and with third countries, while for Finland, France, Germany, Italy and the Netherlands, the results suggest that only trade with third countries has been enhanced by the EMU. Greece is the only country that shows a negative impact in trade with other EMU members and no effect in trade with non‐members. Finally, the results across countries according to the direction of the trade flows (exports versus imports) do not show significant differences in any case.