Re-visiting the Impact of the Euro on Trade Flows: New Evidence Using Gravity Equation with Poisson Count-Data Technique

Mohd Hussain Kunroo,Mansi Khurana,Irfan A Sofi,Sandeep K Mogha

doi:10.1007/978-981-10-3325-4_23

Re-visiting the Impact of the Euro on Trade Flows: New Evidence Using Gravity Equation with Poisson Count-Data Technique

Mohd Hussain Kunroo, Mansi Khurana + Show 2 more

https://doi.org/10.1007/978-981-10-3325-4_23

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Publication Date: Jan 1, 2017

Citations: 2

Affiliation: Central University of Rajasthan, The NorthCap University, Indian Institute of Technology Guwahati, Shree Guru Gobind Singh Tricentenary University

#Gravity Model Of International Trade #Poisson Pseudo-maximum-likelihood + Show 8 more

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Abstract

This paper quantifies the most likely trade effects of the euro introduction using a panel data set of 29 European economies extended over the period 1994 to 2011. For this purpose, a gravity model of international trade is used. Following the recommendations of Santos Silva and Tenreyro (2006) paper [The log of gravity. Rev Econ Stat. 88 (4), 641–658], the gravity equation is estimated using Poisson pseudo-maximum-likelihood (PPML) technique. The main finding of this study is that the introduction of the euro has a small but statistically significant effect on export flows of European economies. The PPML estimates report this effect (euro effect) to be around 7%. This effect, although small, matches with the findings of the recent studies.

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