What has determined the rapid post-war growth of intra-EU trade?

Harald Badinger, Fritz Breuss

Publication: Working/Discussion PaperWU Working Paper

Abstract

Based on the gravity model by Baier and Bergstrand (2001), we use a static and dynamic panel data approach to estimate the relative contributions of income growth, income convergence, and the reductions in tariffs and trade costs to the growth of intra-EU trade over the period 1960 to 2000. The results suggest that income growth was the major force, accounting for approximately two third of total growth. Trade liberalization still had a sizeable effect, accounting de facto for the rest of growth, while income convergence played only a minor role. Reductions in trade costs had no significant effect on the growth of intra- EU trade. The results turn out as robust against several robustness checks and the use of alternative estimators.
Original languageEnglish
Place of PublicationVienna
PublisherForschungsinstitut für Europafragen, WU Vienna University of Economics and Business
Publication statusPublished - 2003

Publication series

NameEI Working Papers / Europainstitut
No.48

WU Working Paper Series

  • EI Working Papers / Europainstitut

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