Trade effects of the EMU: A panel data study of the importance of exchange rate volatility
(2011) NEKM01 20111Department of Economics
- Abstract
- This essay investigates the impact on trade flows of the formation of the European Monetary Union (EMU) and whether countries with differences in the degree of exchange rate volatility prior to the adoption of the euro have experienced such trade effects to different extents. The gravity model forms the basis for the study, which is performed using a fixed effects-method on panel data from 24 OECD-countries between 1995 and 2005.
To a large extent, the results support the hypothesis that countries with high pre-EMU exchange rate volatility have experienced larger increases in trade flows than countries with low pre-EMU exchange rate volatility. In most specifications, the study reports significant and positive coefficients for the... (More) - This essay investigates the impact on trade flows of the formation of the European Monetary Union (EMU) and whether countries with differences in the degree of exchange rate volatility prior to the adoption of the euro have experienced such trade effects to different extents. The gravity model forms the basis for the study, which is performed using a fixed effects-method on panel data from 24 OECD-countries between 1995 and 2005.
To a large extent, the results support the hypothesis that countries with high pre-EMU exchange rate volatility have experienced larger increases in trade flows than countries with low pre-EMU exchange rate volatility. In most specifications, the study reports significant and positive coefficients for the high-volatility group. The effects of the common currency on countries with low volatility are however inconclusive. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/2117039
- author
- Carlsson, Cecilia LU
- supervisor
- organization
- course
- NEKM01 20111
- year
- 2011
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- EMU, trade effects, exchange rate volatility, gravity model, fixed effects-method
- language
- English
- id
- 2117039
- date added to LUP
- 2011-09-27 09:08:19
- date last changed
- 2011-09-27 09:08:19
@misc{2117039, abstract = {{This essay investigates the impact on trade flows of the formation of the European Monetary Union (EMU) and whether countries with differences in the degree of exchange rate volatility prior to the adoption of the euro have experienced such trade effects to different extents. The gravity model forms the basis for the study, which is performed using a fixed effects-method on panel data from 24 OECD-countries between 1995 and 2005. To a large extent, the results support the hypothesis that countries with high pre-EMU exchange rate volatility have experienced larger increases in trade flows than countries with low pre-EMU exchange rate volatility. In most specifications, the study reports significant and positive coefficients for the high-volatility group. The effects of the common currency on countries with low volatility are however inconclusive.}}, author = {{Carlsson, Cecilia}}, language = {{eng}}, note = {{Student Paper}}, title = {{Trade effects of the EMU: A panel data study of the importance of exchange rate volatility}}, year = {{2011}}, }