Using voting outcomes from the European Parliament to measure trends in political convergence and divergence among member states, we show that countries, which converge to the political mainstream within the EU, are more likely to see their trade with other member countries increase in the future. Analyzing inter- and intra-national trade flows between EU member states across the period from 2000 to 2016, we find that countries whose voting behavior converged to the EU average in the past, were characterized by a significantly lower home bias and more trade with other EU member countries in subsequent periods. We rationalize this result by arguing that economic agents form their expectations about the future role of different member states in the union based on whether these countries are currently converging to or diverging from the political mainstream within the EU.
Intra-EU transportation costs, regional trade and cohesion
Do cohesion policies and infrastructure investments increase regional trade integration in the EU? Using the EU's commodity flow survey (ERFT) for the years 2011-2019 and infrastructure investments as part of the Trans-European Transport Network fund I find a border-reducing effect on international trade in the EU on NUTS-2 trade flows. To ensure that this result is not driven by endogenous timing or location of these projects, I exploit the fact that the vast majority of EU-funded infrastructure projects is located in Eastern European member states. I implement a control function approach which utilizes the former Eastern Bloc's economic organisation and its impact on pre-EU road infrastructure. Further, to control for investments not funded by the EU I calculate time-varying travel times between any NUTS-region pairs. This project hence contributes by providing causal estimates for the regional trade effect of infrastructure investments for the EU.
Intra-EU trade-embodied carbon emissions: Is there voting for dirty comparative advantages?
Intra-EU trade-embodied carbon emissions: Is there voting for dirty comparative advantages? (2023), Economics Letters, https://doi.org/10.1016/j.econlet.2023.111305.
I use voting outcomes from the European Parliament to construct a novel sector-specific measure for revealed environmental policy preferences for EU member states. Applying a theory-consistent structural gravity model on intra-EU carbon embodied in trade between 2000 and 2014, this study finds that binding multilateral environmental agreements successfully eliminate comparative advantages for emission intensive industries.