Does the Common Currency Increase Exports? Evidence from Firm-Level Data

The main goal of this paper is to investigate empirically whether the adoption of the common currency increases the export activity of individual frms using the probity model. There are many studies that seek to estimate the aggregate trade effects of the adoption of the euro by the “outside” EU countries, which are based on the gravity model. In contrast to the existing literature we use an alternative micro econometric approach based on firm level data compiled by the EBRD and the World Bank. We demonstrate that the propensity to export of individual frms from Slovenia and Slovakia increased after the accession of those countries to the Eurozone