20 Years of Arnoldshain Seminar
“20 Years of Challenges for Integration, Globalization, and Development”
September 14 – 18, 2015
Frankfurt and Arnoldshain / Taunus

Martinez-Zarzoso, Inmaculada    
AbstracttitleThe Euro Effect on the extensive and intensive margins of trade in intermediate, capital and final goods
Coco-authored with Florian Johannsen
ShortabstractThe aim of this paper is to provide empirical evidence on the relationship between currency unions and trade. The novelties with respect to previous research are threefold. First, monthly trade and exchange rate data are used to take into account the short term effects of volatility in the bilateral exchange rate. Second, disaggregated trade data are used to deal with differences among industries and between intermediate, capital and final goods. Finally, the existence of zero trade flows is taken into account by distinguishing between the extensive and the intensive margins of trade. Investigating the impact of exchange rate volatility and the Euro at the same time allows us to disentangle the effect of a common currency beyond the elimination of any variation in the exchange rate. Furthermore, the developments of the past years with the financial crisis and the EU enlargement to the east are taken into account, yielding additional findings and policy implications.