We investigate the impact of adoption of the euro on the commercial transactions of EMU countries. Since the EMU is a relatively new phenomenon, we use a panel estimation of the gravity equation in a dynamic framework allowing for short run effects like trade persistence. Our main finding is that adoption of the euro has had a positive but not exorbitant impact on bilateral trade among European countries (ranging between 9 and 10%), which is much lower than that derivable from recent literature relative to a larger and heterogeneous set of countries.
- Economic Integration,
- Dynamic Panel data.
Available at: http://works.bepress.com/claudio_vicarelli/7/