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The European Single Market and Intra-EU Trade: An Assessment with Heterogeneity-Robust Difference-in-Differences Methods

Author

Listed:
  • Nagengast, Arne

    (Deutsche Bundesbank)

  • Rios-Avila, Fernando

    (Levy Economics Institute)

  • Yotov, Yoto

    (Drexel University)

Abstract

We use heterogeneity-robust difference-in-differences (DiD) methods to evaluate the impact of membership in the European Union (EU) Single Market on international trade. On the policy front, we provide evidence that: (i) On average, the EU has been very effective in promoting trade among its member states; (ii) The trade effects of the EU have been long-lasting, but heterogeneous across EU cohorts; and (iii) While the EU has benefited both `old' and `new' members, the increase in the exports from the `old' members to the `new' joiners has been disproportionately larger. From a methods and practical perspective, the contribution of this paper is to introduce a new, fast, and flexible estimation command that combines leading estimation techniques from the gravity literature with recent methods from the heterogeneity-robust DiD literature.

Suggested Citation

  • Nagengast, Arne & Rios-Avila, Fernando & Yotov, Yoto, 2024. "The European Single Market and Intra-EU Trade: An Assessment with Heterogeneity-Robust Difference-in-Differences Methods," School of Economics Working Paper Series 2024-5, LeBow College of Business, Drexel University, revised 06 May 2024.
    • Handle: RePEc:ris:drxlwp:2024_005
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    Keywords

    EU membership; Staggered Difference-in-Differences; Gravity Model; Estimation Command;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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