Eurons effekt på handel inom EU

The number of EU members implementing the euro, has been continuously increasing since the currency saw the light of day in 1999. One of the main arguments in favor of implementing the euro, or any other common currency for that matter is the expected gains from increased trade flows. This paper aims to examine whether such increased trade occurs from the implementation of a common currency. More specifically, if the potential effect is due to the actual common currency, or due to the fixed exchange rate that follows from it. The effect is estimated using panel data and Ordinary Least Squares on a gravity model with fixed effects per import, export country and year. The result implies that the euro has an insignificant effect on export while a fixed exchange rate was statistically significantly estimated to increase exports by 24.2 %. The result suggests that countries in the EU only have to peg their exchange rates to the euro and not implement the euro itself in order to achieve the maximum positive effect on trade flows