2008-03-01
The trade and FDI effects of EMU enlargement
Publication
Publication
Journal of International Money and Finance: theoretical and empirical research in international economics and finance , Volume 27 - Issue 2 p. 188- 208
This paper considers the nature and the distribution of trade and FDI effects of a potential enlargement of the European Monetary Union (EMU) to the 10 countries that obtained EU membership in 2004. One-way and two-way error component gravity models are estimated using a data set of unbalanced panel data that combine bilateral trade flows among 29 countries and the distribution of outward FDI stocks among these countries. The results reveal a complementarity between trade and investment and a relationship between trade and exchange rate volatility that depend on the sign of bilateral trade balances. Using a simulation-based technique, we find that estimates of FDI effects of EMU range between 18.5% for Poland and 30% for Hungary.
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| doi.org/10.1016/j.jimonfin.2007.12.005, hdl.handle.net/1765/12962 | |
| ERIM Top-Core Articles , Econometric Institute Reprint Series | |
| Journal of International Money and Finance: theoretical and empirical research in international economics and finance | |
| Organisation | Erasmus Research Institute of Management |
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Brouwer, J, Paap, R, & Viaene, J.M.A. (2008). The trade and FDI effects of EMU enlargement. Journal of International Money and Finance: theoretical and empirical research in international economics and finance, 27(2), 188–208. doi:10.1016/j.jimonfin.2007.12.005
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