Export Market Integration in the European Union

Abstract

This paper examines the degree and recent evolution (1988–2001) of export-price dispersion among European Union countries. It also explores the effect of exchange rates on export- price dispersion by reviewing the experience of some European countries that participated in the exchange rate stability zone. The results indicate that export-price dispersion across European Union countries was usually lower than across OECD countries. Moreover, although there is little evidence of convergence, this is stronger across European Union countries. Finally, even though price dispersion was often lower across European Union countries where exchange rates have been relatively stable than across countries with relatively volatile exchange rates, exchange-rate stability has not significantly contributed to export-price convergence across participating countries over the sample period.

JEL classification codes:

• F15
• F30

Key words:

• export market integration
• European Union
• exchange rates