Trade and output convergence in the new members of the European Union

Ingianni, Andrea (2008) Trade and output convergence in the new members of the European Union. In: Tenth Annual ETSG Conference; 11-13 September 2008, Warsaw, Poland. (Unpublished)

Official URL: http://www.etsg.org/ETSG2008/Papers/Ingianni.pdf

Abstract

The impact of trade on output convergence and economic integration is a highly debated topic with no clear empirical answer. In the paper we start from Ben-David (1993) and we follow Rodriguez (2007) 's footsteps to "test-drive" their major conclusions on the fth round of the European Enlargement. Using EU8 (ee, lt, lv, hu pl si, sk, cz) data we find that most of the original results can not be easily replicated. We propose a stochastic variant based on the concepts of cointegration and causality, which can help shedding some light in presence of short time samples, limited specification potential and trade liberalization policies modelled as smooth transitions. Preliminary evidence fails to conrm the predominant role of trade integration in output convergence suggested by previous research.

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