Effects of Euro on Balance of Trade in the Euro Area

Abstract

AbstractThe introduction of the euro aimed to improve the efficiency of the economic integration in the EU. Since 2002, the euro has assumed a strong position in the international money markets after the dollar. After the introduction of the euro, three main money anchors have been established in the international money markets, namely the dollar, euro and yen. Nevertheless, there are still uncertainties regarding the future value of the euro compared to the dollar and yen, the low economic performance of some EMU member countries and the incomplete integration process of the EU. In previous studies, it was shown that the introduction of the euro affected real interest, per capita income, and inflation rate in a positive way in European Monetary Union (EMU) member countries. Inevitably, these positive effects will also have impacts on the trade in EMU member countries. In the present study, the impacts of the euro on trade in the euro area will be investigated. In the study, the impacts of the euro on the trade balance of the three largest economies will be analysed, which are Germany, France, and Italy.KeywordsEuroEuro areaImportExportTrade balanceEffect