Abstract
The global dominance of the dollar is unquestionable, but the European Commission is committed to strengthening the role of the euro in international relations. Most of the transactions between countries are paid in US dollars even though the United States does not participate in them. Some argue that the euro could become more powerful if it were given more presence in international trade, in particular, in the energy bill of the Eurozone. With the aim of validating that statement, this paper analyses the cointegrating structure between energy imports to the Euro Area from its main partners and those partners’ currency exchange rates to the US dollar. We find that there is a bivariate fractional cointegration relationship between the series in most of the countries considered.
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Acknowledgements
Luis A. Gil-Alana gratefully acknowledges financial support from the Grant PID2020-113691RB-I00 funded by MCIN/AEI/https://doi.org/10.13039/501100011033. An internal Project from the Universidad Francisco de Vitoria is also acknowledged. Comments from the Editor and two anonymous reviewers are gratefully acknowledged
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Malmierca-Ordoqui, M., Gil-Alana, L.A. & Monge, M. Fractional cointegration between energy imports to the EURO area and exchange rates to the US dollar. Empir Econ 66, 859–882 (2024). https://doi.org/10.1007/s00181-023-02468-w
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DOI: https://doi.org/10.1007/s00181-023-02468-w