The Euro and the Intensive and Extensive Margins of Trade: Evidence from French Firm Level Data
40 Pages Posted: 4 Aug 2008
Date Written: April 1, 2008
We improve the study of the effects of a Currency Union on trade. Using data on French exports at the firm level, we compute an intensive and extensive margins of French exports - with a variety dimension - over the period 1998-2003. Estimation results indicate that nominal exchange rate volatility has a negative effect, which translates into the intensive and extensive margins. We also provide some evidence that the euro had an additional positive effect on the extensive margin; this effect is not related to the reduced nominal exchange rate volatility. This suggests a new varieties effect of the euro.
Keywords: trade, export margins, euro
JEL Classification: F15
Suggested Citation: Suggested Citation