Abstract
In this paper we provide an estimate of the trade flows that there would have been between the UK and its main trading partners if the UK had joined the euro. As an alternative approach to the standard log-linear gravity equation, we employ the synthetic control method. We show that the aggregate trade flows between Britain and eurozone members would have been 16% higher if the UK had adopted the euro. We also provide an estimate of the (hypothetical) euro's effect on trade flows between the UK and non-euro countries. Our results suggest that the adoption of the European currency would also have led to a substantial increase in British trade flows with non-euro members. Finally, we provide a new estimate of the euro's trade impact for euro members. Our results suggest that the adoption of the single currency led to an increase in intra-European trade flows of between 19% and 55%.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.