Capital and Trade Flows in Europe and the Impact of Enlargement

Posted: 14 Aug 2001

See all articles by Claudia M. Buch

Claudia M. Buch

Deutsche Bundesbank

Daniel Piazolo

THM Technische Hochschule Mittelhessen

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Abstract

The Eastern enlargement of the European Union (EU) is likely to give a further boost to trade and capital flows, yet empirical evidence on its possible effects is scarce. This paper uses four different datasets to estimate the determinants of international asset holdings and trade flows. We find in most regressions that EU membership has a significant effect. Based on additional forecasts of the expected flows to ten transition economies, we conclude that for the EU candidates actual levels are still far below expected values in most cases. Consequently, we anticipate raising capital and trade flows with the approach of EU accession, in particular for the seven EU candidates besides the Czech Republic, Hungary, and Poland.

Keywords: EU enlargement, International asset holdings, Trade, Gravity model, Simulations

JEL Classification: F15, F17, F21, F36

Suggested Citation

Buch, Claudia M. and Piazolo, Daniel, Capital and Trade Flows in Europe and the Impact of Enlargement. Available at SSRN: https://ssrn.com/abstract=276291

Claudia M. Buch

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Daniel Piazolo (Contact Author)

THM Technische Hochschule Mittelhessen ( email )

University of Applied Sciences
Wilhelm-Leuschner-Straße 13
Friedberg, 61169
Germany

HOME PAGE: http://www.thm.de/wi/daniel-piazolo

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