Euro, Firm Size and Export Behavior

Friday, 26 March 2010: 14:50
Hilton Prague
Silviano Esteve-Perez, Ph.D. , Economia Aplicada II, Universidad de Valencia, Valencia, Spain
Salvador Gil-Pareja, Ph.D , Departamento de Estructura Economica, Universidad de Valencia, Valencia, Spain
Rafael Llorca-Vivero, Ph.D. , Departamento de Estructura Economica, Universidad de Valencia, Valencia, Spain
Jose A. Martinez-Serrano, Ph.D , Departmento de Estructura Economica, Universidad de Valencia, Valencia, Spain
The goal of this paper is to asses the impact of the euro on the relationship between firm size and exports. We follow previous new-new trade theory models to derive some hypotheses that are tested using a representative sample of Spanish manufacturing firms. The results indicate that the introduction of the euro has remarkably weakened the role of firm size in the decision to export to the Eurozone. Moreover, the change in the proportion of exports to the Eurozone is negatively related to firm size. Our results suggest that the euro adoption has reduced the threshold size in order to export to Eurozone countries.
JEL codes: F10, F12
Key words: new-new trade, exports, firm size, euro.