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Europe > Switzerland

You are looking at 1 - 2 of 2 items for :

  • Type: Journal Issue x
  • International trade x
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Cover IMF Working Papers
The Euro’s Effecton Trade Imbalances
Mr. Helge Berger
and
Volker Nitsch
When does trade become a one-way relationship? We study bilateral trade balances for a sample of 18 European countries over the period from 1948 through 2008. We find that, with the introduction of the euro, trade imbalances among euro area members widened considerably, even after allowing for permanent asymmetries in trade competitiveness within pairs of countries or in the overall trade competitiveness of individual countries. This is consistent with indications that pair-wise trade tends to be more balanced when nominal exchange rates are flexible. Intra-euro area imbalances also seem to have become more persistent with the introduction of the euro, some of which is linked to labor market inflexibility. Reviewing the direction of imbalances, we find that bilateral trade surpluses are decreasing in the real exchange rate, decreasing in growth differentials, and increasing in the relative volatility of national business cycles. Finally, countries with relatively higher fiscal deficits and less flexible labor and product markets exhibit systematically lower trade surpluses than others.
Keywords:
WP; trade imbalance; member country; dependent variable; imbalances; trade balance; trade surplus; trade deficit; euro; EMU; European integration; product market; × EMU; exchange rate variability; area trade; exchange rate volatility; euro area member; Plurilateral trade; Trade surpluses; Exchange rates; Trade deficits
Cover IMF Working Papers
Price Impacts of Non-Adoption of the Euro for Small European Countries
Mr. Harald J Anderson
and
Ms. Sibel Beadle
Debates surrounding the adoption of a common currency have focused on its benefits weighed against the long-term costs of losing monetary independence. These debates have assumed that the penalty for not adopting a common currency is the maintenance of the status quo. This paper uses the Sjaastad model to analyze the price-making power of major currencies with regard to the prices of traded goods in small countries that have not adopted the euro and uses the Bayoumi-Eichengreen OCA index methodology to shed further light on changes in Europe. The empirical evidence suggests that small countries that have not adopted the euro have increasingly seen a change in the determinants of their traded goods prices. This seems to contrast with the experience of small countries that adopted the euro. The results need to be interpreted carefully, given the short time series.
Keywords:
WP; U.S. dollar