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Export behavior of German SMEs in the Eurozone

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  • Kenan Bagci

Abstract

The paper investigates the export behavior of German small and medium-sized enterprises (SMEs) in response to the introduction of Euro and the subsequent fall in trade costs. Based on a testable prediction derived from Helpman et al. (American Economic Review 94:300–316, 2004 ) and Helpman (Journal of Economic Literature 44:589–630, 2006 ), the paper argues that the likelihood of SMEs to become an exporter increases after the monetary union. By using an empirical probit estimation technique, it is found that SMEs, and especially medium-sized enterprises, indeed benefit from cost reductions in entering into export markets. What is more, firms operating in furniture, electrical equipment, plastics, medical instruments, machinery and textiles are more likely to benefit from monetary union. These results are robust to using exchange rate volatility as a proxy for the cost reductions due to monetary union. Copyright Springer-Verlag Berlin Heidelberg 2013

Suggested Citation

  • Kenan Bagci, 2013. "Export behavior of German SMEs in the Eurozone," International Economics and Economic Policy, Springer, vol. 10(4), pages 613-629, December.
    • Handle: RePEc:kap:iecepo:v:10:y:2013:i:4:p:613-629
    DOI: 10.1007/s10368-012-0227-2
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    More about this item

    Keywords

    Monetary Union; Export Behavior; Small and Medium-sized Enterprises; F15; F33; D21; F23;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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