Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus
No 10-7:
Milestones of European Integration: Which matters most for Export Openness?
Sanne Hiller ()
and Robinson Kruse ()
Abstract: The European integration process has removed barriers to
trade within Europe. We analyze which integration step has most profoundly
influenced the trending behavior of export openness. We endogenously
determine the single most decisive break in the trend, account for strong
cross-country heterogeneity and propose a new measure for the strength of
trend breaks. Highly open economies gain from both, monetary and real
integration. In sharp contrast, less open economies do not benefit from
real integration and even suffer from monetary integration. The major
milestones for France, Germany, Italy and the Netherlands are the Euro
introduction, the Maastricht Treaty, the Exchange Rate Mechanism I and the
merge of EFTA and EEC to the European Economic Area, respectively. Our
empirical results have important implications for inner-European economic
development, as export openness feeds back into growth, unemployment and
income convergence.
Keywords: European Integration; Export Openness; Trends; Structural Breaks; (follow links to similar papers)
JEL-Codes: C22; F02; F15; F41; (follow links to similar papers)
26 pages, July 1, 2010
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