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The effect of the Euro on the bilateral trade distribution

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Abstract

This paper investigates whether the introduction of the Euro has affected trade. Contrary to the existing literature and motivated by recent development in trade theory, we apply quantile regressions for panel data to examine the effect of the Euro at moments other than the conditional mean of the trade flow distribution. Our results show that even with this more general approach the Euro’s effect on trade remains bleak.

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Notes

  1. This is not true for the conditional mean.

  2. We thank an anonymous referee for this useful comment.

  3. A RTA dummy is not included in the regressions with EEA and EU15 because all the countries in these groups already share a RTA. The regression with OECD countries includes a RTA dummy because not all OECD countries share a RTA and therefore there will be enough variation in the dummy variable representing a RTA.

  4. For cross-sectional data, the asymptotic theory for quantile regression under an increasing number of regressors has been studied by He and Shao (2000) and Belloni et al. (2011).

  5. We thank Silvana Tenreyro for sharing this data with us.

  6. All tables we discuss in this section report estimates obtained using the quantile regression estimator. The standard errors are clustered and robust with respect to heteroskedasticity and serial correlation (Santos Silva and Parente, forthcoming).

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Authors and Affiliations

  1. Federal University of Paraiba, João Pessoa, Brazil

    Erik Figueiredo & Luiz Renato Lima

  2. Department of Economics, University of Tennessee at Knoxville, 527A Stokely Management Center, Knoxville, TN, 37996-0550, USA

    Luiz Renato Lima & Georg Schaur

Authors
  1. Erik Figueiredo
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  2. Luiz Renato Lima
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  3. Georg Schaur
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Correspondence to Luiz Renato Lima.

Additional information

We thank two anonymous reviewers and the editor for helpful comments and suggestions.

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Figueiredo, E., Lima, L.R. & Schaur, G. The effect of the Euro on the bilateral trade distribution. Empir Econ 50, 17–29 (2016). https://doi.org/10.1007/s00181-015-1004-1

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