International effects of euro and the implications of its trade effects on the Turkish economy

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2002
Köse, Murat
The twelve member states of the European Union established a monetary union among themselves by introducing the single currency -euro- and removing their national currencies. Using a single currency eliminates economic inefficiencies brought about in currency conversion and exchange rate variability. These efficiencies generated in the euro area due to the introduction of the euro are to be transmitted to the non-EMU member countries via the trade and financial links, which are referred to as the international effects of the euro. In this thesis, the international effects of the euro are analyzed. In this context, the trade, financial and international monetary effects are discussed. As the euro area is the main trading partner of Turkey, this study focuses mainly on the trade effects. In order to evaluate the magnitude of the trade effects on the Turkish economy, the price and income elasticities of the EMU-member countries' imports iiifrom Turkey are estimated individually. The estimation results indicate a net trade creation effect for Turkey in which Germany has a relatively higher weight. The consumption goods sector and the manufacturing sector will be the main sectors reaping the benefits of the introduction of the euro.
Citation Formats
M. Köse, “International effects of euro and the implications of its trade effects on the Turkish economy,” M.S. - Master of Science, Middle East Technical University, 2002.