Did the European exchange-rate mechanism contribute to the integration of peripheral countries?

Abstract This paper analyses the effect on trade of the exchange-rate mechanism I by member country. We find that it has contributed to a deeper integration of those peripheral countries that participated in the mechanism for at least several years, providing a lesson for the ten new European Union members.

Reciprocal vs nonreciprocal trade agreements: Which have been best to promote exports?

The Doha Development Agenda recognizes the central role that international trade can play in the promotion of economic development. In fact, the increase of exports from developing countries to developed nations' markets has been considered a key element for developing countries to realize the potential benefits of globalization. Over the last decades, developed countries have provided preferential access to their markets to developing countries through nonreciprocal trade agreements. Moreover, developing countries have also participated in reciprocal trade agreements. This paper re-examines comparatively the effect of both kinds of trade agreements on exports from developing countries but …

The impact of embassies and consulates on tourism

Abstract This paper estimates the effect of embassies and consulates on tourist flows from the G-7 countries. The results indicate that embassies and consulates have a positive and significant effect on tourism that ranges between 15% and 30% depending on the estimation technique. Moreover, the impact is larger for the sample of developing countries. The disaggregated analysis shows that, after controlling for both origin and destination fixed effects, a significant impact is found in the seven origin countries.

Export market integration in the European Union

This paper examines the degree and recent evolution (1988-2001) of export-price dispersion among European Union countries. It also explores the effect of exchange rates on exportprice dispersion by reviewing the experience of some European countries that participated in the exchange rate stability zone. The results indicate that export-price dispersion across European Union countries was usually lower than across OECD countries. Moreover, although there is little evidence of convergence, this is stronger across European Union countries. Finally, even though price dispersion was often lower across European Union countries where exchange rates have been relatively stable than across countries…

The Effect of EMU on Tourism

Abstract This paper estimates the effect of the euro on intra-EMU tourist flows by using a panel dataset of 20 OECD countries over the period 1995–2002. The results reveal that the euro has increased tourism, with an effect of around 6.5%. This is a noticeable impact given the early stage of the EMU analyzed. The robustness checks show that the evidence of a positive impact is quite widespread across EMU destinationcountries. 1. Introduction The aim of this paper is to analyze the impact of the euro on tourism among the 12members of the Economic and Monetary Union (EMU) in Europe. One of theexpected effects of the creation of the single European currency was the increase in trade of goods an…

Trade law and trade flows

This paper develops and estimates a model to study the effect of improving the quality of commercial trade law on trade flows. We focus on improvements aimed to privately resolve disputes among trading partners: international commercial arbitration and conciliation. The main novelty of the model is to explicit the balance between the contractual quality of importer and exporter (contractual distance) in an environment with informational frictions (contractual noise). Using a structural gravity estimation with high‐dimensional fixed effects, the main contribution of the empirical exercise is to confirm previous results and unravel new traits that align with our theoretical results. Arbitrati…

EMU and trade: A PPML re‐assessment with intra‐national trade flows

This paper examines the EMU effect on trade for the eleven early joiners and Greece relying for the first time on data that include both international and intra‐national trade flows, in line with all the microfoundations of the structural gravity model of trade. We find that the overall EMU impact on trade is positive between its members and, specially, for trade between members and non‐members. Interestingly, we further show that the effect of the EMU on bilateral trade remarkably differs across countries. For Ireland, Belgium–Luxembourg, Spain, Portugal and Austria, we find robust evidence that EMU has boosted trade both with other members and with third countries, while for Finland, Fran…

The border effect in Spain: The Basque Country case

Gil-Pareja S., Llorca-Vivero R. and Martinez-Serrano J. A. (2006) The border effect in Spain: the Basque Country case, Regional Studies 40, 335–345. This paper investigates the border effect on the Basque Country's trade, using a sample of 28 Organization for Economic Co-operation and Development (OECD) countries between 1995 and 2001. The results indicate that after controlling for market size and distance, the Basque Country trades between 12 and 16 times more with the rest of Spain than it does with any other country. The Spanish bias is lower in the case of the Basque Country's exports than in the case of imports. With respect to the time evolution, the results show a downward trend. Th…

Pricing to market behaviour in European car markets

Abstract This paper investigates PTM behaviour in European car markets for a period of great interest (1993–98), taking into account the role of invoicing currency. The results indicate that local currency price stability is a strong and pervasive phenomenon across products independently of the invoicing currency. The paper offers robustness checks, tests and arguments that justify the interpretation of this finding, at least in part, as evidence of PTM. It implies the existence of market segmentation and price discrimination, despite the completion of the single market programme on 1 January 1993.

Do nonreciprocal preferential trade agreements increase beneficiaries' exports?

Abstract This paper investigates whether and to what extent nonreciprocal preferential trade agreements (NRPTAs) have increased developing countries' exports to richer countries. Using recent developments in the econometric analysis of the gravity equation over the period 1960–2008, we find robust evidence that, on the whole, NRPTAs and the Generalized System of Preferences have had an economically significant effect on exports from developing countries. However, the estimation of catch-all dummies masks heterogeneous results for the individual programs.

Does the GATT/WTO promote trade? After all, Rose was right

This paper re-examines the effect of the GATT/WTO on trade using recent econometric developments that allow us estimating structural gravity equations with the Poisson pseudo-maximum likelihood (PPML) estimator on a large dataset that requires computing high-dimensional fixed effects. By doing so, we overcome computational limitations that are present in previous studies. In line with Rose’s (Am Econ Rev 94:98–114, 2004) seminal work, we find that, unlike regional trade agreements and currency unions, the GATT/WTO accession has not generated positive trade effects. This result is robust to the use of alternative measures of trade flows, across periods and country groups, to changes in the p…

The Border Effect in Spain

This paper analyses the border effect in Spain using a unique dataset on intranational trade flows over the period 1995–98. The results indicate that, after controlling for market size and distance, Spanish regions trade around 22 times more with the rest of Spain than they do with OECD countries. Moreover, the size of the Spanish bias is lower in the case of the Spanish regions’ exports than in the case of imports, although the difference is not statistically significant in most cases. Finally, the border effect is not uniform across Spanish regions.

Instituciones y comercio internacional: el impacto de la corrupción

espanolTras la crisis economica internacional que tiene lugar a partir de 2007, la literatura economica pone el foco en mayor medida en la corrupcion como fenomeno que podria distorsionar el buen funcionamiento del sistema economico. En este sentido, empiezan a surgir trabajos que investigan la relacion existente entre el grado de corrupcion de los paises y el volumen de su comercio internacional, ambito que habia sido poco explorado hasta el momento. Si bien la incertidumbre que supone el actuar en un entorno corrupto puede afectar al negocio internacional, ciertas practicas servirian tambien como mecanismo de desregulacion que facilitaria los flujos comerciales. De hecho, los estudios rea…

Convergence in car prices among European countries

This article contributes to the literature on price convergence in Europe by investigating the existence of stochastic and deterministic convergence of car prices in the EU15 countries. We apply recently developed econometric techniques that allow for multiple structural breaks to an up-to-date dataset. We find considerable evidence of both types of convergence in our sample of countries and car models, therefore suggesting a tendency for relative prices to equalize over time. In addition, we find evidence regarding the importance in this convergence process of both legislative changes taking place in the years 1996 and 2002, and the implementation of Economic and Monetary Union (EMU).

The internationalisation of the Spanish food industry: the home market effect and European market integration

<p>The objective of this study was to analyse, from a long-term perspective, the factors determining the process of the internationalisation of the Spanish agrifood industry. The paper concentrates on the empirical verification of the existence of a home market effect in the food and drink industries in Spain and on the effects on trade flows of integration into the European Union. With this aim in mind, we took into account the latest contributions to the estimation of the gravity equation for a sample of export flows from 13 agrifood subsectors between 1970 and 2012, with a destination of 175 markets. From the results of the study the existence of the “home market effect” stands out…

The impact of the euro on firm export behaviour: does firm size matter?

The goal of this paper is to assess the impact of the euro on the relationship between firm size and exports. We employ previous new-new trade theory models to derive some hypotheses that are tested using a representative sample of Spanish manufacturing firms. The results indicate that the introduction of the euro has remarkably weakened the role of firm size in the decision to export to the Eurozone. What is more, the change in the proportion of exports to the Eurozone is negatively related to firm size. Our results suggest that the euro has reduced the threshold size in order to export to Eurozone countries. Copyright 2011 Oxford University Press 2010 All rights reserved, Oxford Universit…

PRICE CONVERGENCE IN THE EUROPEAN CAR MARKET

International audience; This paper examines price convergence in the European Union car market over the period 1995-2005. We find that there is a clear evidence of price convergence among the EU15 countries, but not before 1999. Moreover, countries of the Economic and Monetary Union (EMU) started convergence previously to the EU15 as a whole. Finally, exchange rate changes have significantly contributed to price dispersion over time across countries. The results provide significant evidence that trade liberalization and the EMU have enhanced the process of regional integration in the European automobile industry, even though there is room for further measures to promote integration.

IS THERE A CONTINENTAL BIAS IN TRADE?

The relationship between geography and trade is a central topic in international economics. This paper investigates the potential existence of a continental bias in world trade flows on a sample of 182 countries over the period 1990-2006. Using traditional estimation techniques and recent developments in the econometric analysis of the gravity equation, we find robust evidence of an economically significant continental bias in trade. It implies that, other things equal, countries located on the same continent trade more with each other than countries located on different continents. A continent-by-continent analysis reveals that Oceania, America, Europe and Asia are behind this result. Afri…

Warning: Bilateral trade agreements do not create trade

Regional headquarters and foreign direct investment

Headquarters (HQs) provide a wide range of services, playing a fundamental role in Foreign Direct Investment (FDI). We use the structural gravity equation to investigate the effect of regional HQs on three dimensions of FDI (number of foreign projects, capital investment, and jobs) at the country-pair-sector level. Furthermore, we explore two underlying mechanisms that help explain this relationship: financial constraints and informational costs and uncertainty. We find a positive effect of regional HQs on FDI, as well as intercountry and intersector spillovers. Our results are robust, accounting for HQ intensity, domestic investment, and endogeneity tests.

Export Price Discrimination in Europe and Exchange Rates

The paper studies pricing-to-market behavior on a wide range of disaggregated European Union exports to OECD countries. The sample allows better identification of products for which such behavior is pervasive. The results suggest that the degree of markup adjustment in response to exchange rate changes is similar across destination markets. The evidence of pricing-to-market across source countries ranges from 40% (Netherlands) to 63% (Germany) of the products in the sample, except for the United Kingdom, where there is remarkably little evidence of it. However, formal comparisons across source countries by product do not usually reveal differences in behavior.

Price Convergence in the European Union

This study investigates the relationship between market integration and price convergence in international markets. Using a panel data set of consumer price indices (general and by groups and classes), it examines how European market integration has affected cross-country dispersion in the European Union.

The effect of the great recession on foreign direct investment: global empirical evidence with a gravity approach

This article estimates the effect of the present global systemic banking crisis on foreign direct investment (FDI) using the gravity equation on a sample of 161 countries over the period 2003 to 2010. Systemic banking crises, through demand shocks and credit constraints, may impact FDI in two ways: aggregate monetary flows and individual projects count. Since gravity equations account for output variations, our research relies on the financial constraints channel. We find that the great recession, through credit constraints on home supply markets, has reduced the number of FDI projects, but not their size, forcing investors to become more selective on their international endeavours.

Trade effects of monetary agreements: Evidence for OECD countries

Abstract This paper analyses the effects of monetary agreements on trade flows using a sample of 25 OECD countries over the period 1950–2004. We find that these agreements have boosted intra-bloc trade. This result especially applies to the case of the euro. More importantly, in contrast to regional trade agreements, all monetary agreements analysed show evidence of trade-creating effects with third countries. Finally, only the euro shows a symmetric impact for the trade-creating effect with non-members, that is, using the euro promotes both the Eurozone's exports and its imports to non-Eurozone markets to a similar extent.

Threshold cointegration and nonlinear adjustment between goods and services inflation in the United States

In this paper, we model the long-run relationship between goods and services inflation for the United States over the period 1968:1–2003:3. Our empirical methodology makes use of recent developments on threshold cointegration that consider the possibility of a nonlinear relationship between the two inflation series. According to our results, the null hypothesis of linear cointegration would be rejected in favor of a two-regime threshold cointegration model. Consequently, we could expect a cointegrating relationship only when the divergence between services inflation and goods inflation is above the threshold point estimate.