The impact of EMU on trade flows

Grauwe, Paul De; Skudelny, Frauke

doi:10.1007/bf02707286

Cited by 79 publications

(24 citation statements)

References 17 publications

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“…15 The vector z ij includes 13 In the empirical estimation, a correction for heteroskedasticity (and correlation of errors) is allowed for. 14 An alternative would be to use a simple non-linear least square estimator (NLS).…”

Section: Correcting the Biases 321 The Pml-iv Methodologymentioning

confidence: 99%

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On the Trade Impact of Nominal Exchange Rate Volatility

Tenreyro

2004

SSRN Journal

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What is the effect of nominal exchange rate variability on trade? I argue that the methods conventionally used to answer this perennial question are plagued by a variety of sources of systematic bias. I propose a novel approach that simultaneously addresses all of these biases, and present new estimates from a broad sample of countries from 1970 to 1997. The answer to the question is "Zero:" Nominal exchange rate variabibily has no impact on trade flows.

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Section: Correcting the Biases 321 The Pml-iv Methodologymentioning

confidence: 99%

“…Santos Silva and Tenreyro (2003) perform a series of Monte Carlo experiments in gravity equations, which reveal that the PML approach is significantly more efficient than NLS in trade data models. 15 See Windmeijer and Santos Silva (1997) for further discussion.…”

Section: Correcting the Biases 321 The Pml-iv Methodologymentioning

confidence: 99%

On the Trade Impact of Nominal Exchange Rate Volatility

Tenreyro

2004

SSRN Journal

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“…The measure is the purchasing-power-parity (PPP) for GDP divided by the U.S. dollar exchange rate. 13 In the first instance, this measure gives us the price level in country i relative to that in the United States, P i,t /P US,t . We then compute relative prices between countries i and j by dividing the value for country i by that for country j.…”

Section: Data Description and Sourcesmentioning

confidence: 99%

Optimal Currency Areas

Alesina¹,

Barro²,

Tenreyro³

2002

194

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As the number of independent countries increases and their economies become more integrated, we would expect to observe more multi-country currency unions. This paper explores the pros and cons for different countries to adopt as an anchor the dollar, the euro, or the yen. Although there appear to be reasonably well-defined euro and dollar areas, there does not seem to be a yen area. We also address the question of how trade and co-movements of outputs and prices would respond to the formation of a currency union. This response is important because the decision of a country to join a union would depend on how the union affects trade and co-movements. AbstractAs the number of independent countries increases and their economies become more integrated, we would expect to observe more multi-country currency unions. This paper explores the pros and cons for different countries to adopt as an anchor the dollar, the euro, or the yen. Although there appear to be reasonably well-defined euro and dollar areas, there does not seem to be a yen area. We also address the question of how trade and co-movements of outputs and prices would respond to the formation of a currency union. This response is important because the decision of a country to join a union would depend on how the union affects trade and co-movements.

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“…In addition, previous investment in export-assisting infrastructure could also affect the trade relationship between countries (Sichei, Erero & Gebreselasie, 2008). This means that, if South Africa exported products to certain destinations at time t -1, it would generally still do so at time t. Although still taking account of this inertia effect, certain panel studies using gravity estimations introduced dynamism (De Grauwe & Skudelny, 2000). By relaxing the zero trade balance and incorporating the persistence effect, a partial adjustment mechanism changes exports to have the form:…”

Section: A Gravity Modelmentioning

confidence: 99%