Of markets,products and prices: The effects of the euro on European firms

The introduction of the euro was initially expected to boost trade by an enormous percentage. Following many downward revisions of original estimates the current consensus estimate amounts to an increase of about 5 per cent. In view of the initial high expectations this is often seen as a dismal result. It is, however, based on aggregate data and may therefore hide important microeconomic gains that arise even for a given level of trade fl ows. This paper uses detailed product and firm level data to shed light on these hidden gains. This paper is based on the EFIGE Report 2008, issued under the same title as Bruegel Blueprint Series Volume VIII. The research leading to these results has received funding from the European Community’s Seventh Framework Programme (FP7/2007-2013) under grant agreement No. 225551 and from the Bank of France. The views expressed in this publication are the sole responsibility of the authors and do not necessarily reflect the views of the European Commission or the Bank of France. We are grateful to Andrew Fielding for editorial support. Opinions expressed in this publication are those of the authors alone.