Euros and Zeros: The Common Currency Effect on Trade in New Goods / Richard E. Baldwin, Virginia Di Nino.

Format:

Book

Author/Creator:

Baldwin, Richard E.

Contributor:

National Bureau of Economic Research.

Di Nino, Virginia.

Series:

Working Paper Series (National Bureau of Economic Research) no. w12673.

NBER working paper series no. w12673

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Euros and Zeros

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2006.

Summary:

This paper tests whether trade in new goods is partially responsible for the pro-trade effects of the euro and provides a measure of the size of the effect. It works with a very large data set (about 16 million observations) covering twenty countries at the most disaggregated level of trade data that is publicly available. Using predictions from a heterogeneous-firms trade model in a multi-country environment to structure our empirical model, we find that the euro had a positive impact on trade overall. Our findings provide supportive but not conclusive evidence for the new-goods hypothesis. We also determined the pro-trade effect of euro-usage on non-Euroland nations trading with euro-users. We confirmed the absence of trade diversion for non-Eurozone EU members with sizeable overall increase comparable to that of members.

Notes:

Print version record

November 2006.