Open Economies Review

, Volume 18, Issue 5, pp 599–612

Testing the Links between Institutional Integration and Trade Deepening: Clues from Europe

  • Itai Agur
  • Ettore Dorrucci
  • Francesco Paolo Mongelli
Research article

DOI: 10.1007/s11079-007-9016-x

Cite this article as:
Agur, I., Dorrucci, E. & Mongelli, F.P. Open Econ Rev (2007) 18: 599. doi:10.1007/s11079-007-9016-x
  • 81 Downloads

Abstract

This paper investigates the interaction between institutional integration and trade deepening in the EU over the last 50 years. It uses Granger causality tests, a VECM and variance decompositions to further the understanding of this interaction. The evidence indicates two-way endogeneity. But the link from institution building to trade dominates. Yet, this link has weakened over time, possibly due to globalisation sidestepping institutions. Moreover, the sensitivity of institutional integration to trade deepening has risen, which suggests that economic forces have gained more strength in determining institutional steps.

Keywords

Optimum currency area Endogeneity Institutional integration Trade EU 

JEL Classification

E42 F15 F33 F41 

Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  • Itai Agur
    • 1
  • Ettore Dorrucci
    • 2
  • Francesco Paolo Mongelli
    • 2
  1. 1.European University InstituteFlorenceItaly
  2. 2.European Central BankFrankfurt/MainGermany

Personalised recommendations