Impact Of Euro Research Articles

Does the euro increase FDI in the real estate industry? Evidence from the German case

PurposeThere have been many studies on the euro's impact on trade volume, foreign direct investment (FDI) and the integration of European financial markets. Previous research has tried to find empirical evidence for convergence of real estate securities markets. However, less attention has been paid to the euro's effect on FDI in the real estate industry. The purpose of this paper, therefore, is to analyze the euro's effect on FDI in the real estate industry between Germany and European partner countries.Design/methodology/approachIt is hypothesised that the adoption of the euro will increase the volume of FDI flows in the real estate industry between Germany and European partner countries. To estimate the euro's effect on FDI in the real estate industry, a modified gravity equation is adopted. Pooled OLS and random effects models are utilised.FindingsResults from panel data from 34 countries between 1986 and 2009 suggest that the euro contributed to the increase in the German bilateral FDI in the real estate industry to and from European partner countries. However, it is interesting that the euro's effects were only significant in FDI inflows under a random effects model.Originality/valueThe paper's findings provide original evidence for the positive impact of the euro on FDI in the real estate industry between Germany and European partner countries.

Rose effect versus border effect: the Euro's impact on trade

The purpose of this article is to test the common finding of a positive ‘Rose Effect’ (RE) in the case of the Euro through a comparison with an indicator of integration among the Euro Zone (EZ) countries: the ‘Border Effect’ (BE). This study of the Euro's impact using both the RE and the BE is a novelty in the literature. Our findings cast doubts about the supposed trade-costs reduction caused by the Euro, reduction which is the main explanation of the positive RE estimated in several works. Both indicators are estimated by means of a gravity model for bilateral trade flows using a panel of manufacture exports and production figures.

Currency Unions in Prospect and Retrospect

We critically review the recent literature on currency unions and discuss the methodological challenges posed by the empirical assessment of their costs and benefits. In the process, we provide evidence on the economic effects of the euro. In particular, and in contrast with estimates of the trade effect of other currency unions, we find that the euro's impact on trade has been close to zero. After reviewing the costs and benefits of joining a currency union, we conclude with some open questions on normative and positive aspects of the theory of currency unions, emphasizing the need for a unified welfare-based framework to weigh their costs and gains.

What lies beneath the euro's effect on financial integration? Currency risk, legal harmonization, or trade?

Although recent research shows that the euro has spurred cross-border financial integration, the exact mechanisms remain unknown. We investigate the underlying channels of the euro's effect on financial integration using data on bilateral banking linkages among twenty industrial countries in the past thirty years. We also construct a dataset that records the timing of legislative–regulatory harmonization policies in financial services across the European Union. We find that the euro's impact on financial integration is primarily driven by eliminating the currency risk. Legislative–regulatory convergence has also contributed to the spur of cross-border financial transactions. Trade in goods, while highly correlated with bilateral financial activities, does not play a key role in explaining the euro's positive effect on financial integration.

What Lies Beneath the Euro's Effect on Financial Integration? Currency Risk, Legal Harmonization, or Trade?

Although recent research shows that the euro has spurred cross-border financial integration, the exact mechanisms remain unknown. We investigate the underlying channels of the euro's effect on financial integration using data on bilateral banking linkages among twenty industrial countries in the past thirty years. We also construct a dataset that records the timing of legislative-regulatory harmonization policies in financial services across the European Union. We find that the euro's impact on financial integration is primarily driven by eliminating the currency risk. Legislative-regulatory convergence has also contributed to the spur of cross-border financial transactions. Trade in goods, while highly correlated with bilateral financial activities, does not play a key role in explaining the euro's positive effect on financial integration.

Zooming out: The trade effect of the euro in historical perspective

In this paper, we put the trade effect of the euro in historical perspective. Using a data set that includes 22 industrial countries from 1948 to 2003, we find strong evidence of a gradual increase in trade intensity between European countries over time. Once we control for this trend in trade integration, the euro's impact on trade disappears. Moreover, a significant part of the trend in European trade integration is associated with measurable policy changes in areas such as exchange rate policy and institutional integration.

Zooming Out: The Trade Effect of the Euro in Historical Perspective

In 1999, eleven European countries formed the Economic and Monetary Union (EMU); they abandoned their national currencies and adopted a new common currency, the euro. Several recent papers argue that the introduction of the euro has led (by itself) to a sizable and statistically significant increase in trade between the member countries of EMU. In this paper, we put the trade effect of the euro in historical perspective. We argue that the creation of the EMU was a continuation (or culmination) of a series of previous policy changes that have led over the last five decades to greater economic integration among the countries that now constitute EMU. Using a data set that includes 22 industrial countries from 1948 to 2003, we find strong evidence of a gradual increase in trade intensity between European countries. Once we control for this trend in trade integration, the euro's impact on trade disappears. Moreover, a significant part of the trend in European trade integration is explained by measurable policy changes.

Advocating EMU: the institutions faultlines of monetary union

Tbe paper commences with an examination ofthe nature of European Intégration during the 1990s and locates Economie and Monetary Union (EMU) within the dynamics of this intégration. Thèse dynamics are both exogenous and endogenous and contain within tbem the potential for intégration and désintégration, a paradox clearly évident in the notion and application ofEMU, that me may observe as a metaphorfor Europe 's unique brand of régional co-operation. Cumnt institutional déficits are explored with référence to the accountability and legitimacy ofthe EMU project and the Euro 's impact on European intégration in the médium term.

The Impact of the Euro on Information Systems

The European Economic Union (EEU) adopted a single currency, the “euro” on January 1, 1999. Such a development has far-reaching implications for development of information systems, the engines that will have to run and control the new monetary order. For example, euro-compliant systems will need to accommodate: (1) six decimal places, a major change for those companies in countries that did not require decimal places (e.g., Belgium and Italy), or even those that require only two, (2) “triangulation” between currencies rather than classic inversion, (3) multiple currencies for each transaction, and (4) differences between invoice amounts and amounts actually paid, since there can be rounding differences on conversions with triangulation. These changes are just the surface requirements for the euro currency change. Because the euro problem is very new, few companies have begun, let alone completed making, their euro systems changes. As a result, limited research is available regarding the euro. The purpose of this article is to help fill this void by examining the principal issues of the euro's impact on information systems and to identify research opportunities related to the euro problem.

The Euro's Impact on Pay and HR Policies

While the introduction of the euro is bound to give new impetus to economic convergence across the European Union, different forms of unevenness-along with different tax and social security regimes-will persist for the foreseeable future. Different approaches to compensation and benefits will also persist, although there have been some signs of convergence during the past ten years. Corporate HR policies will have to con-tinue to take these differences into account, especially when a company operates both inside and outside the eurozone.