IDEAS home Printed from https://ideas.repec.org/p/ann/wpaper/3-2017.html
   My bibliography  Save this paper

The impact of the euro adoption on the complexity of goods in Slovenian exports

Author

Listed:
  • Piotr Gabrielczak

    (Faculty of Economics and Sociology, University of Lodz)

  • Tomasz Serwach

    (Faculty of Economics and Sociology, University of Lodz)

Abstract

In this paper, we estimate Erceg, Henderson and Levin’s [2000] sticky price and sticky wage dynamic stochastic general equilibrium (DSGE) model while allowing for wage or price Calvo parameters regime switching and compare this with the constant parameters model. Our results suggest that the model with price and wage rigidity switching is strongly favored by the data. However, we do not find significant evidence in support of independent Markov chains. Moreover, we identify historical periods when price and wage stickiness were low and show that during such periods, the economy reacts more strongly to structural shocks.

Suggested Citation

  • Piotr Gabrielczak & Tomasz Serwach, 2017. "The impact of the euro adoption on the complexity of goods in Slovenian exports," Lodz Economics Working Papers 3/2017, University of Lodz, Faculty of Economics and Sociology.
    • Handle: RePEc:ann:wpaper:3/2017
    as

    Download full text from publisher

    File URL: http://repozytorium.uni.lodz.pl:8080/xmlui/bitstream/handle/11089/20346/LEWP_3_2017.pdf?sequence=1&isAllowed=y
    File Function: First version, 2017
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Glick, Reuven & Rose, Andrew K., 2016. "Currency unions and trade: A post-EMU reassessment," European Economic Review, Elsevier, vol. 87(C), pages 78-91.
    2. Costinot, Arnaud, 2009. "On the origins of comparative advantage," Journal of International Economics, Elsevier, vol. 77(2), pages 255-264, April.
    3. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    4. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
    5. Alejandro Micco & Ernesto H. Stein & Guillermo Luis Ordoñez, 2003. "The Currency Union Effect on Trade: Early Evidence from EMU," Research Department Publications 4339, Inter-American Development Bank, Research Department.
    6. Nicolas Berman & Philippe Martin & Thierry Mayer, 2012. "How do Different Exporters React to Exchange Rate Changes?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(1), pages 437-492.
    7. Richard Baldwin & Virginia Dinino & Lionel Fontagné & Roberto Desantis & Daria Taglioni, 2008. "Study on the Impact of the Euro on Trade and Investment," Post-Print hal-00639943, HAL.
    8. Lionel Fontagné & Thierry Mayer & Gianmarco Ottaviano, 2009. "Of markets, products and prices: The effects of the euro on European firms," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 44(3), pages 149-158, May.
    9. Stephan Huber, 2018. "Product Sophistication and Spillovers from Foreign Direct Investment," Contributions to Economics, in: Product Characteristics in International Economics, chapter 0, pages 51-90, Springer.
    10. Aristovnik, Aleksander & Matevz, Meze, 2009. "The Economic and Monetary Union’s effect on (international) trade: the case of Slovenia before euro adoption," MPRA Paper 17445, University Library of Munich, Germany.
    11. Jeffrey Frankel, 2010. "The Estimated Trade Effects of the Euro: Why Are They Below Those from Historical Monetary Unions among Smaller Countries?," NBER Chapters, in: Europe and the Euro, pages 169-212, National Bureau of Economic Research, Inc.
    12. Bergin, Paul R. & Lin, Ching-Yi, 2012. "The dynamic effects of a currency union on trade," Journal of International Economics, Elsevier, vol. 87(2), pages 191-204.
    13. Josep M Vilarrubia & Rubén Segura-Cayuela, 2008. "Uncertainty and entry into export markets," 2008 Meeting Papers 661, Society for Economic Dynamics.
    14. Gomis Porqueras, Pedro & Puzzello, Laura, 2015. "Winners and losers from the Euro," Working Papers eco_2015_2, Deakin University, Department of Economics.
    15. Chaney, Thomas, 2016. "Liquidity constrained exporters," Journal of Economic Dynamics and Control, Elsevier, vol. 72(C), pages 141-154.
    16. Alejandro Micco & Ernesto Stein & Guillermo Ordoñez, 2003. "The currency union effect on trade: early evidence from EMU [‘A theoretical foundation for the gravity equation’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 18(37), pages 315-356.
    17. Richard E. Baldwin & Virginia Di Nino, 2006. "Euros and Zeros: The Common Currency Effect on Trade in New Goods," NBER Working Papers 12673, National Bureau of Economic Research, Inc.
    18. Berger, Helge & Nitsch, Volker, 2008. "Zooming out: The trade effect of the euro in historical perspective," Journal of International Money and Finance, Elsevier, vol. 27(8), pages 1244-1260, December.
    19. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    20. Mayer, Thierry & Zignago, Soledad, 2006. "Notes on CEPII’s distances measures," MPRA Paper 26469, University Library of Munich, Germany.
    21. Campos, Nauro F. & Coricelli, Fabrizio & Moretti, Luigi, 2014. "Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Counterfactuals Method," IZA Discussion Papers 8162, Institute of Labor Economics (IZA).
    22. Sergio Nardis & Claudio Vicarelli, 2003. "Currency unions and trade: The special case of EMU," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 139(4), pages 625-649, December.
    23. Andrzej Cieślik & Jan Jakub Michałek & Jerzy Mycielski, 2014. "Trade effects of the euro adoption by the EU new member states," Bank i Kredyt, Narodowy Bank Polski, vol. 45(4), pages 331-348.
    24. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
    25. Matthieu Crozet & Pamina Koenig & Vincent Rebeyrol, 2008. "Exporting to Insecure Markets: a Firm-Level Analysis," Working Papers 2008-13, CEPII research center.
    26. Torfinn Harding & Beata S. Javorcik, 2012. "Foreign Direct Investment and Export Upgrading," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 964-980, November.
    27. Saia, Alessandro, 2017. "Choosing the open sea: The cost to the UK of staying out of the euro," Journal of International Economics, Elsevier, vol. 108(C), pages 82-98.
    28. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 369-405.
    29. Tadashi Ito & Toshihiro Okubo, 2016. "The Impact of the Euro on the Quality of Trade: Evidence from the European Union," Manchester School, University of Manchester, vol. 84(4), pages 506-527, July.
    30. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    31. Mr. Nikola Spatafora & Rahul Anand & Mr. Saurabh Mishra, 2012. "Structural Transformation and the sophistication of Production," IMF Working Papers 2012/059, International Monetary Fund.
    32. Coricelli, Fabrizio & Campos, Nauro & Moretti, Luigi, 2014. "Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Co," CEPR Discussion Papers 9968, C.E.P.R. Discussion Papers.
    33. Richard Baldwin & Virginia DiNino & Lionel Fontagné & Roberto A. De Santis & Daria Taglioni, 2008. "Study on the Impact of the Euro on Trade and Foreign Direct Investment," European Economy - Economic Papers 2008 - 2015 321, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    34. Ricardo Hausmann & César Hidalgo, 2011. "The network structure of economic output," Journal of Economic Growth, Springer, vol. 16(4), pages 309-342, December.
    35. Auboin, Marc & Ruta, Michele, 2013. "The relationship between exchange rates and international trade: a literature review," World Trade Review, Cambridge University Press, vol. 12(3), pages 577-605, July.
    36. Oded Galor & Andrew Mountford, 2008. "Trading Population for Productivity: Theory and Evidence," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 75(4), pages 1143-1179.
    37. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    38. Andrzej Cieslik & Jan Michalek & Anna Michalek, 2013. "The Impact Of The Common Currency On Exports Of New Emu Members: Firm-Level Evidence For Slovenia And Slovakia," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 8(4), pages 7-23, December.
    39. Daniel Lederman & William F. Maloney, 2012. "Does What You Export Matter? In Search of Empirical Guidance for Industrial Policies," World Bank Publications - Books, The World Bank Group, number 9371.
    40. Kaul, Ashok & Klößner, Stefan & Pfeifer, Gregor & Schieler, Manuel, 2015. "Synthetic Control Methods: Never Use All Pre-Intervention Outcomes Together With Covariates," MPRA Paper 83790, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ben Saad, Myriam & Brahim, Mariem & Schaffar, Alexandra & Guesmi, Khaled & Ben Saad, Rym, 2023. "Economic complexity, diversification and economic development: The strategic factors," Research in International Business and Finance, Elsevier, vol. 64(C).
    2. Esteban Colla‐De‐Robertis & Rafael Garduno Rivera, 2021. "The effect of a free trade agreement with the United States on member countries' per capita GDP: A synthetic control analysis," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(4), pages 1129-1145, August.
    3. Giovanni Mellace & Alessandra Pasquini, 2019. "Identify More, Observe Less: Mediation Analysis Synthetic Control," CEIS Research Paper 474, Tor Vergata University, CEIS, revised 20 Nov 2019.
    4. Mellace, Giovanni & Pasquini, Alessandra, 2019. "Identify More, Observe Less: Mediation Analysis: Mediation Analysis Synthetic Control," Discussion Papers on Economics 12/2019, University of Southern Denmark, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Piotr Gabrielczak & Tomasz Serwach, 2017. "Does the euro increase the complexity of exported goods? The case of Estonia," Lodz Economics Working Papers 4/2017, University of Lodz, Faculty of Economics and Sociology.
    2. Piotr Gabrielczak & Tomasz Serwach, 2017. "The impact of the euro adoption on the complexity of goods in Slovenian exports," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 35(1), pages 45-71.
    3. Mellace, Giovanni & Pasquini, Alessandra, 2019. "Identify More, Observe Less: Mediation Analysis: Mediation Analysis Synthetic Control," Discussion Papers on Economics 12/2019, University of Southern Denmark, Department of Economics.
    4. Saia, Alessandro, 2017. "Choosing the open sea: The cost to the UK of staying out of the euro," Journal of International Economics, Elsevier, vol. 108(C), pages 82-98.
    5. Chen, Natalie & Novy, Dennis, 2017. "Currency unions, trade and heterogeneity," LSE Research Online Documents on Economics 88487, London School of Economics and Political Science, LSE Library.
    6. Verstegen, Loes & van Groezen, Bas & Meijdam, Lex, 2017. "Benefits of EMU Participation : Estimates using the Synthetic Control Method," Other publications TiSEM 505ae6bb-8e7a-4d71-9f44-e, Tilburg University, School of Economics and Management.
    7. Giovanni Mellace & Alessandra Pasquini, 2019. "Identify More, Observe Less: Mediation Analysis Synthetic Control," CEIS Research Paper 474, Tor Vergata University, CEIS, revised 20 Nov 2019.
    8. Harald Badinger & Kemal Türkcan, 2014. "Currency Unions, Export Margins, and Product Differentiation: An Empirical Assessment for European Monetary Union," Review of International Economics, Wiley Blackwell, vol. 22(1), pages 13-30, February.
    9. Jia Hou, 2020. "Revisiting the trade effects of the euro: data sources and various samples," Empirical Economics, Springer, vol. 59(6), pages 2731-2777, December.
    10. Mariam Camarero & Estrella Gómez-Herrera & Cecilio Tamarit, 2018. "New Evidence on Trade and FDI: how Large is the Euro Effect?," Open Economies Review, Springer, vol. 29(2), pages 451-467, April.
    11. Drivas, Kyriakos & Kalyvitis, Sarantis & Katsimi, Margarita, 2023. "Export prices and markups with a common currency: Empirical evidence from Greek exporting firms and euro adoption," International Review of Economics & Finance, Elsevier, vol. 87(C), pages 79-98.
    12. Bergin, Paul R. & Lin, Ching-Yi, 2012. "The dynamic effects of a currency union on trade," Journal of International Economics, Elsevier, vol. 87(2), pages 191-204.
    13. Inmaculada Martínez-Zarzoso, 2019. "The Euro and the CFA Franc: Evidence of Sectoral Trade Effects," Open Economies Review, Springer, vol. 30(3), pages 483-504, July.
    14. Gabriel, Ricardo Duque & Pessoa, Ana Sofia, 2024. "Adopting the euro: A synthetic control approach," European Journal of Political Economy, Elsevier, vol. 83(C).
    15. Tal Sadeh, 2014. "The euro’s effect on trade," European Union Politics, , vol. 15(2), pages 215-234, June.
    16. Cieślik Andrzej & Michałek Jan & Michałek Anna, 2014. "Does the Common Currency Increase Exports? Evidence from Firm-Level Data," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 41(1), pages 8-22, March.
    17. Mohd Hussain Kunroo & Irfan Ahmad Sofi & Naushad Ali Azad, 2016. "Trade implications of the Euro in EMU countries: a panel gravity analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(2), pages 391-413, May.
    18. Isaac Mensah, 2019. "The euro's effect on trade: an analysis of "old" and "new" EMU members," Review of Economics and Institutions, Università di Perugia, vol. 10(1).
    19. Hope, David, 2016. "Estimating the effect of the EMU on current account balances: A synthetic control approach," European Journal of Political Economy, Elsevier, vol. 44(C), pages 20-40.
    20. Andrzej Cieslik & Jan Michalek & Anna Michalek, 2013. "The Impact Of The Common Currency On Exports Of New Emu Members: Firm-Level Evidence For Slovenia And Slovakia," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 8(4), pages 7-23, December.

    More about this item

    Keywords

    Eurozone; international trade; Slovenia; complexity; synthetic control method.;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ann:wpaper:3/2017. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LEWP Editors (email available below). General contact details of provider: https://edirc.repec.org/data/welodpl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.