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Trade Effects of Monetary Non-Integration: Evidence from Denmark

Endres, Kai LU and Greally, Cathal Patrick LU (2024) NEKP01 20241
Department of Economics
Abstract
This study examines the impact of monetary non-integration on trade flows, specifically focusing on Denmark and how Danish trade with the founding members of the Eurozone would have developed if Denmark would have adopted the Euro in 1999. We turn to the Synthetic Control Method (SCM) to create a synthetic Denmark that adopted the Euro in 1999 and find significant negative effects for Danish trade. While Danish exports are 3% lower, Danish imports are 18% lower than what they could have been had Denmark introduced the Euro in 1999, resulting in a treatment effect of -12% for bilateral trade with the Eurozone members. Lastly, our results are robust to various robustness checks, with the Difference-in-Differences estimates suggesting a... (More)
This study examines the impact of monetary non-integration on trade flows, specifically focusing on Denmark and how Danish trade with the founding members of the Eurozone would have developed if Denmark would have adopted the Euro in 1999. We turn to the Synthetic Control Method (SCM) to create a synthetic Denmark that adopted the Euro in 1999 and find significant negative effects for Danish trade. While Danish exports are 3% lower, Danish imports are 18% lower than what they could have been had Denmark introduced the Euro in 1999, resulting in a treatment effect of -12% for bilateral trade with the Eurozone members. Lastly, our results are robust to various robustness checks, with the Difference-in-Differences estimates suggesting a higher treatment effect of monetary non-integration. (Less)
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author
Endres, Kai LU and Greally, Cathal Patrick LU
supervisor
organization
course
NEKP01 20241
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Denmark, Eurozone, Trade, Synthetic Control Method, Monetary Integration
language
English
id
9161097
date added to LUP
2024-10-01 13:18:10
date last changed
2024-10-01 13:18:10
@misc{9161097,
  abstract     = {{This study examines the impact of monetary non-integration on trade flows, specifically focusing on Denmark and how Danish trade with the founding members of the Eurozone would have developed if Denmark would have adopted the Euro in 1999. We turn to the Synthetic Control Method (SCM) to create a synthetic Denmark that adopted the Euro in 1999 and find significant negative effects for Danish trade. While Danish exports are 3% lower, Danish imports are 18% lower than what they could have been had Denmark introduced the Euro in 1999, resulting in a treatment effect of -12% for bilateral trade with the Eurozone members. Lastly, our results are robust to various robustness checks, with the Difference-in-Differences estimates suggesting a higher treatment effect of monetary non-integration.}},
  author       = {{Endres, Kai and Greally, Cathal Patrick}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Trade Effects of Monetary Non-Integration: Evidence from Denmark}},
  year         = {{2024}},
}