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The euro and the competitiveness of European firms
[‘Optimal currency areas’]

Author

Listed:
  • Gianmarco I.P. Ottaviano
  • Daria Taglioni
  • Filippo di Mauro

Abstract

Much attention has been paid to the impact of a single currency on actual trade volumes. Lower trade costs, however, matter over and beyond their effects on trade flows: as less productive firms are forced out of business by the tougher competitive conditions of international markets, economic integration fosters lower prices and higher average productivity. We assess the quantitative relevance of these effects calibrating a general equilibrium model using country, sector and firm-level empirical observations. The euro turns out to have increased the overall competitiveness of Eurozone firms, and the effects differ along interesting dimensions: they tend to be stronger for countries which are smaller or with better access to foreign markets, and for firms which specialize in sectors where international competition is fiercer and barriers to entry lower.— Gianmarco I.P. Ottaviano, Daria Taglioni and Filippo di Mauro

Suggested Citation

  • Gianmarco I.P. Ottaviano & Daria Taglioni & Filippo di Mauro, 2009. "The euro and the competitiveness of European firms [‘Optimal currency areas’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 24(57), pages 6-53.
    • Handle: RePEc:oup:ecpoli:v:24:y:2009:i:57:p:6-53.
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    File URL: http://hdl.handle.net/10.1111/j.1468-0327.2009.00216.x
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    Citations

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    Cited by:

    1. Andrei A. Levchenko & Jing Zhang, 2012. "Comparative advantage and the welfare impact of European integration [General equilibrium analysis of the Eaton–Kortum model of international trade]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 27(72), pages 567-602.
    2. Katrin Peters & Monika Schnitzer, 2015. "Trade liberalization and credit constraints: Why opening up may fail to promote convergence," Canadian Journal of Economics, Canadian Economics Association, vol. 48(3), pages 1099-1119, August.
    3. repec:hal:pseose:hal-00975562 is not listed on IDEAS
    4. Grigaliuniene, Zana & Celov, Dmitrij & Hartwell, Christopher A., 2020. "The more the Merrier? The reaction of euro area stock markets to new members," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 66(C).
    5. Henryk Gurgul & Lukasz Lach, 2016. "Comparative advantage of the EU in global value chains: How important and efficient are new EU members in transition?," Managerial Economics, AGH University of Science and Technology, Faculty of Management, vol. 17(1), pages 21-58.
    6. Antoine Berthou & Lionel Fontagné, 2013. "How do Multiproduct Exporters React to a Change in Trade Costs?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(2), pages 326-353, April.
    7. Giorgia Giovannetti & Marco Sanfilippo & Margherita Velucchi, 2011. "The “China effect” on EU Exports to OECD markets – A focus on Italy," Working Papers - Economics wp2011_17.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    8. Békés, Gábor, 2012. "Euróbevezetés és a válság - szigorúan ellenőrzött tagságok," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 685-689.
    9. Movahedi, Mohammad, 2013. "Le commerce international, l’adoption de l’innovation et le choix de l’entrée-sortie à l’exportation des firmes [International trade, innovation adoption and export entry-exit choice of the firms]," MPRA Paper 44268, University Library of Munich, Germany, revised 01 Jan 2014.
    10. repec:agr:journl:v:6(595)(supplement):y:2014:i:6(595)(supplement):p:295-309 is not listed on IDEAS
    11. GIURGIU Adriana & DODESCU Anca, 2009. "Globalisation And Export Competitiveness: A Theoretical Approach," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 318-324, May.
    12. Peter Egger & Sebastian Kunert & Tobias Seidel, 2018. "The Competitive Effects of Credit Constraints in the Global Economy," Economica, London School of Economics and Political Science, vol. 85(340), pages 771-792, October.
    13. Chiang, Shu-hen & Liu, Wen-Chien & Suardi, Sandy & Zhao, Jing, 2021. "United we stand divided we fall: The time-varying factors driving European Union stock returns," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 71(C).
    14. Emmanuel Dubois & Jerome Hericourt & Valerie Mignon, 2009. "What if the euro had never been launched? A counterfactual analysis of the macroeconomic impact of euro membership," Economics Bulletin, AccessEcon, vol. 29(3), pages 2241-2255.
    15. Ana-Maria CAZACU (BANCU), 2014. "Romania’s external competitiveness. A macro approach," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(Special), pages 295-309, June.
    16. di Mauro, Filippo & Forster, Katrin & Lima, Ana, 2010. "The global downturn and its impact on euro area exports and competitiveness," Occasional Paper Series 119, European Central Bank.

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