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Prepared by Werner Schule.
Econometric work, controlling for these and other factors found that currency unions boost trade significantly. Frankel and Rose (2000) have estimated very large effects of EMU on trade. Follow-up work by others confirmed the positive effect on trade but found it to be of smaller magnitude.
Delozier and Montout (2007) found that intra-industry has bounced back recently in the U.S. and the euro area. We did not find a similar rebound in the five countries under consideration.
In each sector (j) it is measured as: import penetration in sector (j) = imports of sector (j) products/(gross output of sector(j)+imports of sector (j) products -exports of sector (j) products).