TY  - JOUR
AU  - Baldwin,Richard E.
AU  - Nino,Virginia Di
TI  - Euros and Zeros: The Common Currency Effect on Trade in New Goods
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12673
PY  - 2006
Y2  - November 2006
UR  - http://www.nber.org/papers/w12673
L1  - http://www.nber.org/papers/w12673.pdf
N1  - Author contact info:
Richard Baldwin
Cigale 2
1010 Lausanne
SWITZERLAND
Tel: 41-22-908-5900
E-Mail: rbaldwin@cepr.org

Virginia Di Nino
Bank of Italy
E-Mail: virginia_di_nino@hotmail.com
AB  - This paper tests whether trade in new goods is partially responsible for the pro-trade effects of the euro and provides a measure of the size of the effect. It works with a very large data set (about 16 million observations) covering twenty countries at the most disaggregated level of trade data that is publicly available. Using predictions from a heterogeneous-firms trade model in a multi-country environment to structure our empirical model, we find that the euro had a positive impact on trade overall. Our findings provide supportive but not conclusive evidence for the new-goods hypothesis. We also determined the pro-trade effect of euro-usage on non-Euroland nations trading with euro-users. We confirmed the absence of trade diversion for non-Eurozone EU members with sizeable overall increase comparable to that of members.
ER  -