Was the euro a good idea for European trade?

Abstract

In this thesis I have studied the effect that the euro has had on European Union trade patterns among its members. The data used in from different 26 EU countries that go from 1993 to 2010. During this period several European countries entered into a common currency union, besides old socialist Eastern European countries did access to the European Union and later on to the euro itself. Using gravity equation theory, I have tried to estimate the size of the effect of the euro, which goes from 8% to 12% in the simplest specification and reaching 26% for the most complex ones. Other concerns affecting the gravity equation have also been addressed in this paper.