Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152966
Authors: 
Anderton, Robert
Baltagi, Badi H.
Skudelny, Frauke
Sousa, Nuno
Year of Publication: 
2005
Series/Report no.: 
ECB Working Paper 532
Abstract: 
The aim of this paper is to improve our understanding of the key determinants of intra- and extra-euro area imports. Using a simultaneous equation estimation framework, and pooling the data across nine euro area countries as an approximation of the euro area, we estimate intra- and extra-euro area import demand functions and impose various restrictions within and across equations. We find that there are significant substitution effects between intra- and extra-euro area imports due to changes in their relative prices, while exchange rate volatility decreases trade vis-à-vis regions characterised by volatility and leads to substitution of trade away from higher-volatility regions towards lower-volatility regions.
Subjects: 
intra- and extra-euro area imports
substitution
three stage least squares
trade integration
JEL: 
C32
C33
E00
E32
O3
Document Type: 
Working Paper

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