The effects of the European Economic and Monetary Union (EMU) and European Union (EU) on trade are separately estimated using an empirical gravity model. Employing a panel approach with both time-varying country and dyadic fixed effects on a large span of data (across both countries and time), it is found that EMU and EU each significantly boosted exports. EMU expanded European trade by 40% for the original members, while the EU increased trade by almost 70%. Newer members have experienced even higher trade as a result of joining the EU, but more time is necessary to see the effects of their joining EMU.
Glick, Reuven. 2016. “Currency Unions and Regional Trade Agreements: EMU and EU Effects on Trade,” Federal Reserve Bank of San Francisco Working Paper 2016-27. Available at https://doi.org/10.24148/wp2016-27