Estimating the Euro Effects on Trade with Propensity Score Matching

Authors

  • Pandej Chintrakarn

    Corresponding author
    1. Southern Methodist University, USA
      Chintrakarn: Southern Methodist University, Dallas, TX 75275-0496, USA. Tel: 214-768-4335; Fax: 214-768-1821; E-mail: pchintra@mail.smu.edu.
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  • The author is grateful for very helpful comments from two anonymous referees, Daniel Millimet, as well as Menzie Chinn. The usual caveats apply.

Chintrakarn: Southern Methodist University, Dallas, TX 75275-0496, USA. Tel: 214-768-4335; Fax: 214-768-1821; E-mail: pchintra@mail.smu.edu.

Abstract

We investigate the effect of the euro on trade among EMU members. Using various semi-nonparametric methods based on matching, we find that the euro has a statistical and economic impact on trade. The results show that two countries sharing the euro currency trade somewhere between 9% and 14% more than other country-pairs. In addition, we find no evidence of trade diversion due to the euro.

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