Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/162667
Authors: 
Mika, Alina
Year of Publication: 
2017
Series/Report no.: 
ECB Working Paper 2046
Abstract: 
This study examines the home bias in trade in goods and services within the European Union. Using the newest release of the World Input Output database, available for the years 2000-2014, the effect is estimated using gravity regressions. The trade-reducing effect of borders is found to be sizeable. It is greater for trade in services than for goods, though the former declined more markedly throughout the period. The paper extends current literature by demonstrating and analysing the variation in the bias across Europe. The border effect is larger in Central and Eastern Europe than in other parts of the continent. The differences in the effect can be largely explained by the depth of a country's integration with the European Union. The number of years passed since a country joined the EU has a significant impact on the bias. The longer a country has been in the EU, the lower its home bias, with the first years of membership having the largest (in absolute terms) effect.
Subjects: 
trade
gravity
border effect
European Union
JEL: 
F02
F15
F14
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-2768-0
Document Type: 
Working Paper

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